Share divestment disincentives for investors
Wednesday, March 14 2012 - 12:53 AM WIB
Vale Indonesia, formerly known as Inco Indonesia said it would continue business in Indonesia despite the newly-issued regulation on share divestment would be a major disincentive for big investors interested in pouring investment to build smelters and refineries to upgrade added-value of mineral.
?The requirement to divest shares to local partners is a major disincentive for big investors,? Vice President Director Bernardus Irmanto said referring to the Government Regulation No. 24/2012 requiring the foreign-owned mines to gradually divest up to 51 percent stakes to Indonesian companies after 10 years of commercial operations.
The government has encouraged investors to build the processing and refinery facility through the ministerial regulation number 7 which give deadline until May before banning the export of raw mineral.
But on the other hand, the government issued the regulation limiting the shares of foreign companies in mining sector.
?The result is that only the type of (small) investment that will go ahead.?
He explained that of the huge number of nickle miners in Sulawesi, only Vale and the state-owned mining company PT Aneka Tambang Tbk (Antam) operated smelters while the remaining (the smaller-scaled firms) exported their nickel ores.
Editing by David Mustakim