Indonesia limits foreign mine ownership to 49%

Freeport's Grasberg copper mine
Image caption Indonesia has vast reserves of copper, coal, tin and gold

Indonesia will limit foreign ownership of its mines to 49%, which is likely to have an impact on overseas investment in the country.

Foreign mining license holders will have to cut their stake down from 80% within 10 years, according to the Energy and Mineral Resources Ministry.

The policy change was made on 21 February but not announced until Wednesday.

Indonesia is keen to increase domestic investment in mining projects.

Adverse effects

"The aim is the state has to get more. For new investment it will be simple, but for existing investment there must be renegotiation," Mining Minister Jero Wacik said.

The details of how the policy would affect those existing investments is unclear.

However, some raised alarm at the changes.

"This policy will threaten Indonesia's mining investment climate," said Syahrir Abubakar, executive director of the Indonesian Mining Association, adding that he feared foreign companies would not invest in the Indonesian mining sector any more.

Future investment

Resource-rich Indonesia has reserves of gold, tin, copper and coal.

Major foreign investors in Indonesia's mining projects include the world's largest mining company, BHP Billiton, which own a 75% stake in a Kalimantan coal project.

Freeport-McMoran operates the Grasberg gold and copper mines in Papua.

In a statement the company said it was confident that the Indonesian government would honour existing contracts, but that the company had begun voluntarily divesting some of its stake.

It said there was a "mutual commitment as part of Freeport Indonesia efforts for future investment".

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