Foreigners May Have To Sell 20% Of 100%-Owned Indonesian Mines

Indonesia may require foreign companies to sell 20% of any wholly-owned mines in the country to local investors within 10 years of the start of production, an official said Tuesday.

"The divestment will start in the sixth year of production, with 5% of the stake to be divested every year," Bambang Gatot, the director of minerals, coal and geothermal at the Ministry of Energy and Mineral Resources told Dow Jones Newswires.

The government may enact the new ruling by October, Gatot said.

The parliament in December passed a new mining law that requires divestment of foreign ownership to a maximum of 80%, but left it to the government to decide on the details.

Prior to the new law, the government required only certain foreign investors to sell stakes in their mines in Indonesia to local buyers.

In several cases, the divestment didn't go through smoothly. For example, the government and Newmont Mining Corp. (NEM) last year decided to go to international arbitrators after they failed to agree on the divesture of part of the U.S. miner's holdings in a gold mine in Sumbawa Island.

-By Deden Sudrajat, contributing to Dow Jones Newswires; 62-21 39831277; [e-mail]