The recently proposed Government takeover of some 28 mining and other projects, including the very valuable Martabe Gold Mining Project in North Sumatra, is a highly questionable process characterized by various problematic issues and a lack of transparency.
The most problematic issue is the apparent absence of a proper legal basis for at least some of these project takeovers which the Government has sought to justify on the grounds of alleged wrongdoing in forest areas by the relevant project owners. This alleged wrongdoing is said to have exacerbated the damage from last year’s disastrous floods in Sumatra.
The recently proposed project takeovers can also be viewed from the perspective of a lack of transparency on the part of the Government as to what is really happening and why.
Although the Government now seems to be “furiously back-peddling” on at least the proposed takeover of the Martabe Gold Project, this may well be too little and too late to overcome the damage that has already been caused to Indonesia’s reputation as a reliable destination for investment generally and, more particularly, for mining industry investment.
In this article, the writer will briefly review what is known about the proposed mining and other project takeovers before considering, in some detail, the various problematic issues underlying the legality of at least some of those proposed takeovers as well as the associated lack of transparency. Finally, the writer will consider the implications, for project owners, investors and financiers, of the proposed takeovers.
Author:
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Bill Sullivan (bsullivan@cteolaw.com) |