Australian mining companies were Friday playing down the implications of a change in Indonesian law capping foreign ownership in mines at no more than 49%, despite some uncertainty over how the new regulation would be implemented.

Companies with existing "contracts of work," a system dating back to 1967, contend the agreements remain valid until the agreed expiry. Privately, many said they believe the target of the new law are mining licenses known as IUP concessions.

Under the "contracts of work" system which governed investment in Indonesia's coal, copper, gold and other resources, foreign investors had been allowed to hold up to 80% of mining companies, but the Energy and Mineral Resources Ministry Wednesday said foreign investors would now be required to gradually reduce their stake to 49% after 10 years of operation from the start of production.

Many details remain unclear, but a senior Indonesian official told Dow Jones Newswires that the rule change will only affect new contracts or the renewal of existing contracts.

"We understand the changes do not apply to [our] existing contract of work, which expires in 2029," said Kerrina Watson, a spokeswoman for Newcrest Mining Ltd. (NCM.AU), Australia's largest producer of gold.

Newcrest owns 82.5% of Gosowong, which produced 107,500 ounces of gold in the three months through December. PT Aneka Tambang owns the remainder.

Mining giant BHP Billiton Ltd. (BHP) was still reviewing the presidential decree, spokesman Antonios Papaspiropoulos said. BHP owns 75% of the IndoMet Coal operation in East Kalimantan. Indonesian company, Adaro energy TBK owns the other 25% and holds a coal contract of work.

A spokesman for Anglo-Australian miner Rio Tinto PLC (RIO) wasn't immediately able to respond to questions about the new law.

Robust Resources Ltd. (ROL.AU) said it would seek advise, but didn't expect it would have to make any divestments after having already taken on an Indonesian investor that has a 22.5% stake in its local subsidiary and 9.4% holding in Robust itself. Robust has two projects on Romang Island.

A number of existing contracts of work already contain obligations to sell stakes in mining assets to an Indonesian government body or an Indonesian national.

Kingrose Mining Ltd. (KRM.AU) said it isn't directly affected by the new law as its 85% Indonesian subsidiary holds a contract of work over a gold and silver project in Sumatra that is valid until 2034. The government has twice deferred an obligation to begin the process of cutting its ownership in the subsidiary to 49%, and it said it has been advised it has strong ground to continuing deferring to March 2016.

Straits Resources Ltd. (SRQ.AU) on its website said the contract of work for its Mt Muro mine in the province of Central Kalimantan requires it to offer 51% of the operation, and while it complies with this requirement each year, it has so far not received any proposal.

One company with an IUP mining concession, Intrepid Mines Ltd. (IAU.AU), said it was studying the regulation and considering its best course of action for its Tujuh Bukit gold-silver-copper project on the island of Java. It said the effect of and time frame for the amended regulation was still subject to interpretation.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

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