Update COVID-19 in Indonesia: 497,668 confirmed infections, 15,884 deaths (23 November 2020)
23 November 2020 (closed)
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Again a big western mining company plans to exit Indonesia. US-based Newmont Mining Corp reportedly agreed to sell its 48.5 percent stake in copper and gold miner Newmont Nusa Tenggara (the operator of the Batu Hijau mine) for USD $1.3 billion (including contingent payment of up to USD $403 million). The stake is set to be sold to Amman Mineral Internasional. Newmont Chief Executive Gary Goldberg said the move is in line with the company's commitment to lower debt and fund its higher margin mining projects in order to create value for shareholders.
Through the deal, Amman Mineral Internasional will see its share ownership in Newmont Nusa Tenggara rise to 82.2 percent. However, Indonesian oil & gas exploration and production firm Medco Energi Internasional will acquire Amman Mineral Internasional for USD $2.6 billion, implying that this listed oil & gas firm will obtain control over Newmont Nusa Tenggara, the operator of the Batu Hijau mine on the island of Sumbawa. This open pit mine is Indonesia's second-largest copper and gold mine (after the Grasberg mine that is operated by Freeport Indonesia).
According to a statement released by Newmont Nusa Tenggara, the takeover will not have negative consequences for the employees or business/trading partners of the mining company as it remains committed to existing policies, targets and standards.
Earlier, Chevron Corporation and Total S.A. decided to cut operations in Indonesia. Chevron will return all its oil and gas assets in the East Kalimantan block back to the Indonesian government in October 2018. Meanwhile, Total and Japan-based Inpex - each commanding a 50 percent stake in the Mahakam block - will see their production sharing contract with the Indonesian government expire in 2017 because the Indonesian government will not extend the contract. Instead, Indonesia's state-owned energy firm Pertamina and the regional East Kalimantan government will obtain a 70 percent stake in the block (after 2017), while the remaining 30 percent will be split between Total and Inpex.
The combination of low commodity prices and Indonesia's protectionist approach (the main theme in the 2009 New Mining Law) are reasons for foreign mining companies to exit Indonesia.