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Abstract

This article examines mining share divestment in Indonesia as an instrument of state control over natural resources and assesses the legal, institutional, and environmental challenges affecting its implementation. Using a normative legal approach, the study analyzes the applicable constitutional, statutory, and regulatory framework, supported by cases involving PT Kasongan Bumi Kencana, PT Newmont Nusa Tenggara, and PT Freeport Indonesia. The analysis identifies recurring problems relating to delayed compliance, fragmented institutional authority, limited financial capacity among Indonesian participants, and disputes concerning share valuation. Public Choice Theory and Rational Choice Theory are employed as supplementary analytical lenses to explain governmental decision-making concerning the implementation, financing, and valuation of divested shares. The article further argues that, although a transfer of shares does not alter the legal identity of the mining company or extinguish environmental liabilities arising from its operations, Indonesian divestment regulations do not expressly require existing and contingent environmental liabilities to be identified, disclosed, valued, and allocated during the transaction. This transaction-specific regulatory gap may expose Indonesian purchasers to undisclosed remediation costs and diminish the economic benefits of divestment. Accordingly, the article proposes operationalizing the polluter pays principle through mandatory environmental due diligence, liability disclosure and valuation, verification of reclamation guarantees, and appropriate indemnity or financial-reserve mechanisms. These measures are necessary to ensure that mining share divestment promotes not only domestic ownership and public welfare but also legal certainty and environmental accountability.

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