OUTLINE
Presentation
1. Foreign Shareholding Limitation and Divestment Requirement
2. Typical Foreign Ownership Structures
3. Benchmark Pricing
4. Domestic Refining/Processing Requirement
5. Relaxation on Export Ban
6. Smelter Licenses (MOI vs MEMR)
7. Letter of Credit
8. Shifting of Authority
9. BKPM to Issue Mining Licenses
Appendix
10. Minimum Refining/Processing Level
Foreign Shareholding Limitation and Divestment Requirement
Mining Companies
- 100% open for foreign ownership if establishing a new company to bid for a mining license
- Divestment requirement after 5 years of commercial production
- Divestment requirement is gradual from 6th through 10th or 15th year after commercial production
Smelter Companies
- 100% open for foreign ownership
- No divestment requirement
MEMR Regulation No. 27 of 2013 (September 13, 2013)
- 75% - maximum foreign ownership if acquiring an existing mining company in the exploration stage
- 49% - maximum foreign ownership if acquiring an existing mining company in the operation production stage
Note: Foreign ownership includes both foreign companies and Indonesian companies with direct or indirect foreign shareholders
Foreign Shareholding Limitation and Divestment Requirement
Maximum Foreign Ownership after Divestment: (Government Regulation No. 77 of 2014)
- 49% - mining companies which do not conduct their own processing and/or refining (i.e., mining companies with no internal smelting capacity)
- 60% - mining companies which conduct their own processing and/or refining (i.e., mining companies with internal smel7ng capacity)
- 70% - mining companies which conduct underground mining (in whole or combined with open‐pit mining)
Divestment - Requirement to sell shares to Indonesian parties, which include:
- Central Government
- Regional Government
- State-Owned Enterprise
- Regent‐Owned Enterprise
- Indonesian private business entities
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