Indonesia set to alter rules on mining deals

JAKARTA • Indonesia plans to amend its rules on mining contracts by the end of the year, a government official said, allowing US miner Freeport-McMoRan to apply for an extension of its contract at the Grasberg copper and gold mine.

Freeport has, for years, been seeking contract certainty from the Indonesian government. Its existing mining contract ends in 2021, but present rules allow talks on an extension to start only two years before a contract is due to end.

"A revision to the government regulation on the time of a contract extension proposal is now being processed in the economics ministry," Mr Bambang Gatot, director-general of coal and mineral at the mines ministry told reporters yesterday. "We expect it can be released soon, this year," he said.

The new rules may allow companies to propose an extension 10 years before their contracts expire.

Freeport said on Thursday it had been assured by Jakarta that the contract for its Grasberg mine in the eastern province of Papua would be extended beyond 2021.

Foreign resources companies have faced rising nationalist sentiment in South-east Asia's largest economy in recent years as politicians push a raft of policies they say are aimed at keeping profits from lucrative mining within the country.

The most prominent measure was a controversial ban introduced last year on exports of some unprocessed mineral ores, in a bid to encourage domestic processing.

Yet President Joko Widodo has shown signs that the government is trying to mend fences with wary investors.

His government has been rolling out new measures to re-energise Indonesia after growth cooled in the second quarter to 4.67 per cent, the slowest pace in six years.


A version of this article appeared in the print edition of The Straits Times on October 10, 2015, with the headline 'Indonesia set to alter rules on mining deals'. Print Edition | Subscribe