Policy confusion hobbles Indonesian mining (Nikkei Asian Review – November 21, 2017)


The long-running dispute between the Indonesian government and U.S. minerals company Freeport-McMoRan over Grasberg, the world’s largest gold mine and second-largest copper mine, shows little sign of ending any time soon — despite optimistic government claims to the contrary.

Indeed, Indonesian President Joko Widodo’s confused and contradictory mining policies are damaging the country’s hopes of extracting maximum benefit from its natural resources.

If the government will not change course, and in particular reimpose a ban on the export of raw minerals, the courts or the voters must force his hand. Indonesia’s economic development hangs on getting things right in an industry crucial to the country’s future.

In August, Freeport reluctantly agreed to comply with a 2012 law requiring it to divest 51% of its stake in the subsidiary that owns Grasberg, in the remote province of Papua. But a dispute has now arisen over the sale price and a resolution without arbitration appears distant.

Cries of victory from the government following the deal were predictably over-exuberant. While Freeport reluctantly accepts the need to sell down its interest to keep Grasberg in operation beyond the expiration of its current license in 2021, it understandably insists on getting a fair price.

For the rest of this article: https://asia.nikkei.com/Viewpoints/Marwan-Batubara/Policy-confusion-hobbles-Indonesian-mining