News & Opinions Home
Market Place
Business Wire
Research and Markets: Australian Mining Giant BHP Billiton Divests All of Its Assets in Indonesia in July 2009
Saturday October 31, 06:30 AM
Research and Markets(http://www.researchandmarkets.com/research/109c86/indonesia_mining_r)
has announced the addition of the "Indonesia
Mining Report Q4 2009" report to their offering.
The Indonesia Mining Report provides industry professionals and
strategists, corporate analysts, mining associations, government
departments and regulatory bodies with independent forecasts and
competitive intelligence on Indonesia's mining industry.
A major blow was dealt to foreign investment in the country by the
decision by Australian mining giant BHP Billiton to divest all of its
assets in the country in July 2009. Though the company did not cite
government policies as a reason for pulling out of Indonesia, BHP had
previously struggled in obtaining a Contract of Work permit for a
notable joint venture (JV) with PT Antam and as a result had terminated
the agreement. The Indonesian government was confident that it could
find investors to take over BHP Billiton's projects, but such a move by
one of the world's largest resource groups, would no doubt send cautious
signals to other foreign investors.
The new mining law was passed in December 2008 changing the permitting
structure from the long-term Contracts of Work (COW) to shorter-term
permits covering different stages of the mining process. The chief
regulations in the new mining bill would see closer involvement and more
power of overseeing the mining projects by the government, and new rules
of divestment. The new law states that a 5% stake in projects
established by foreign investors should be sold each year. After five
years, 20% of shares must be divested to the government, state-owned
enterprises or domestic private companies. The previous law did not
stipulate an obligation to divest shares, although some companies had
agreed to do so although this often sparked long disputes over the terms
of divestment.
In March 2009, following a protracted dispute, Denver-based mining giant
Newmont Mining was ordered by an arbitration court in Indonesia to sell
17% of shares in its copper gold Batu Hijau mine within six months.
Newmont owns the mine in a JV with Japan's Sumitomo. The JV, called PT
Newmont Nusa Tengarra (PTNNT), initially signed an agreement in December
1986 that 51% of the company's shares would be sold to local firms or
the government over stages in accordance to an agreed schedule.
The new mining law also comes at a time when investors are hesitant
about launching new ventures due to the current economic climate.
Investors will be looking for additional security and stability to
counter the effects of the global economic downturn, and the new regime
of permits and licenses may act as a deterrent. A criticism of the
shorter permit length is that it does not afford the mining companies
the flexibility they need to respond to the dynamic changes in the
commodity market such as rapid fluctuations in price. The various stages
of mining in reality may not match those outlined on paper in the new
mining law. There is also some concern that five years is too short a
period before divestment should take place, with analysts pointing out
that the mining industry is slow to develop and takes time to break even
and make a profit. For established mining companies this may not be a
concern but it could deter new investors into the country.
Indonesia has been affected by the economic downturn, which has resulted
in weakened demand and falling commodity prices. Many companies cut
production across the various mining sectors in 2009. Tin was notably
affected, and the world's largest integrated tin miner PT Timah Tbk
announced it would be cutting production in an effort to buoy trade
prices of the metal. After a surge in tin prices in May 2009 however,
many tin smelters were unable to boost production to take advantage of
this due to depleting ore reserves and the burden of wet weather
flooding mines and hindering operations.
Key Topics Covered:
Executive Summary
SWOT Analysis
Special Focus: Outlook For Global Mining
Mining Business Environment
Political Environment
Competitive Landscape
Company Monitor
Appendices
Companies Mentioned:
BHP Billiton
Bumi Resources
PT Aneka Tambang Tbk (Antam)
Rio Tinto
For more information visit http://www.researchandmarkets.com/research/109c86/indonesia_mining_r
Contact:Research and MarketsLaura Wood, Senior Manager,press@researchandmarkets.comU.S. Fax: 646-607-1907Fax (outside U.S.): +353-1-481-1716
Next Article: Lend Lease Bid Wins Tick
Previous article: 14 Finalists of the Asian CSR Awards Announced
Top Headlines
NZ sharemarket slightly down, employment data weak
Thursday November 5, 06:20 PM - NZPA
The New Zealand sharemarket drifted down today after weak employment data caused investors to question the strength of the re .. Read More
Financial markets
Thursday November 5, 05:45 PM - Newstalk ZB
On the markets, the NZX 50 is down 15 points to 3151. .. Read More
NZ dollar falls on employment data, Bollard comments
Thursday November 5, 05:43 PM - NZPA
The New Zealand dollar took a step lower today on disappointing employment data, then another step down on comments by Reserv .. Read More
Calculators
Copyright © 2009 Yahoo! All rights reserved.
Yahoo!Xtra: A Yahoo!7/Telecom New Zealand Company.