Mining Law Implementation Regulations Require Increased Foreign Divestment

The Indonesian government has
released implementing regulations for
the Indonesian mining law adopted
in 2009 which markedly increase the
requirement for foreign divestment of
Indonesian mining companies.

The implementing regulations require foreign shareholders of Indonesian mining companies that hold a mining license to divest shares in stages each year beginning on the sixth year after the commencement of commercial production with a divestiture requirement of at least 51% by the tenth year after commencement of commercial operation. The implementing regulations require a tender to be made for the divestment with shares offered first to the central government. Even with Indonesia’s robust increase in foreign investment and the popularity of the Indonesian mining industry among Hong Kong investors, it remains unclear whether this new divesture requirement will curb the appetite of Hong Kong investors.


A miner in Indonesia’s Central Sulawesi province

 

- Akin Gump Hauer Strauss & Feld

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