While US mining giant Freeport McMoran’s contract dispute has hogged headlines, smaller foreign miners are next in the government’s nationalistic sights
American mining giant Freeport McMoRan Copper & Gold may dominate headlines for its endless negotiations with the Indonesian government over the fate of its rich Grasberg mine, but spare a thought for the small foreign mining firms who are getting trampled in the process.
The Ministry of Energy and Mineral Resources has recently sent an ultimatum to eight Contract of Work (CoW) holders that it will be “unable to provide any services to company activities” if the hold-outs fail to sign a 37-page amended contract by the end of the year.
Riding a wave of resource nationalism that began at the start of the commodity boom in the mid-2000s, the ministry has already rejected one firm’s request for an extended feasibility study and turned down another’s 2018 work program, both of which are needed to raise additional finance.
There are no winners here. In one case, the ultimatum means laying off 150 local workers and the cancellation of a planned UD$150 million mine development that would have employed as many as 600 extra staff and generated US$20 million a year in taxes.
What baffles the mostly Australian concession holders is that at a meeting some weeks before the November 2 letter from mineral development director Bambang Susigit, Deputy Energy and Mineral Resources Minister Archandra Tahir assured them that rumors of a pending ultimatum were unfounded.
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