Yet another greedy government has changed the rules mid-stream with the result of driving away foreign investment in mining, jobs and people.

The Indonesian government imposed an new 25% export tax in January for any copper concentrates in the country, and will increase it to 35% on January 2015.

Indonesia is a fantastic country comprised of thousands of miles of volcanic arcs that are the factory which forms giant porphyry copper-gold deposits.  Discovering these beasts is difficult and expensive as they hide in remote mountainous regions where they are masked by thick jungle cover.  Intrepid teams of geologists exploring in these regions, often in dangerous conditions, sometimes with the support of helicopters, put their skills on the line while their supporting company risks millions of dollars in hopes of a discovery.  Even a discovery amongst these 1000:1 odds does not equal success as Indonesia makes every step of the way a painful, difficult, time consuming and costly process to acquire permits for mining. Few can endure the pain and most companies have left.

Enduring the process is one thing, but few companies still, have the deep pockets required to invest billions in this risky environment.  Newmont and Freeport are two companies that have endured the process and both have operating copper mines in the country which account for almost all of Indonesia’s copper exports.  But the rules of the game have been changed mid-stream.  It is likely that this will cause major curtailing and potential closing of operations putting thousands out of work, and negative consequences for tens of thousands.

Accepting risk, providing capital to generate wealth for the country and benefits to the people is what large mining companies do best.  Repatriating or nationalizing deposits does not work.  Excessive or windfall taxes do not work.  All cause the fleeing of foreign investment and expertise required to extract the value from the ground.

Regretfully Indonesia is joining a growing list of countries that have killed their exploration industries and crippled their mining future.  Mongolia, Argentina and Ecuador, and even Australia, are additional examples where robust exploration efforts and international investment have vanished in response to actions from greedy governments.