It is no secret that the Indonesian government is putting pressure on miners to spend big bucks to develop Indonesian industry. While these political challenges are a headache for miners, the reality is that Indonesia only represents a portion of these firms' issues. Newmont Mining's (NYSE:NEM) first quarter 2014 adjusted net income fell $245 million to $108 million year over year, mainly as a result of falling commodity prices. On the other hand, Freeport-McMoRan's (NYSE:FCX) strong oil and gas operations are diversifying its income and improving its debt load.

Indonesian adventures
In light of limited domestic Indonesian copper processing capacity, Freeport-McMoRan cut its Graber production 60%, resulting in deferred first quarter 2014 production of 125 million pounds of copper and 140,000 ounces of gold. Freeport-McMoRan's Indonesian smelting operations help it to reduce exports, but Newmont Mining does not have such facilities. It was recently forced to halt operations at its Batu Hijau mine.

While both companies emphasize their strong legal standing with previously determined contracts of work, the reality is that laws are seldom set in stone. The fact that both Newmont and Freeport-McMoRan have agreed to put down $25 million and $100 million respectively as a smelter guarantee suggests that exports will be limited until additional smelting capacity can be constructed.

Vale (NYSE:VALE) also runs a big nickel mining operation in Indonesia. The government's current push to increase domestic metals processing has had little impact on Vale, though, as the firm has run processing operations on Indonesian soil for a number of decades. The Indonesian government's aggression is still somewhat concerning for Vale, of course, as it needs to renegotiate its contract of work with of hope of investing $4 billion to improve its operations. 

The big picture
In the great scheme of things Indonesia is really not a huge issue for Vale. Its entire nickel segment accounted for 9.6% of first quarter 2014 revenues. At 54.1% of first quarter 2014 revenue, iron ore is by far Vale's biggest revenue drive and major contributor to its ferrous minerals segment. With an adjusted segmented EBITDA margin of 52%, Vale has fat ferrous mineral margins that can easily endure some price volatility.

Freeport-McMoRan is more exposed to Indonesia than Vale. In 2014, Freeport had hoped that Indonesia would contribute 20% of its EBITDA. Oil and gas is expected to contribute 32%. Given Freeport-McMoRan's existing Indonesian processing operations and first quarter 2014 consolidated copper unit net cash costs of $1.54 per pound, the company has room to deal with volatile prices and political struggles. 

For Newmont Indonesia represents 70.9% of its 2013 total copper production. Newmont's overall costs applicable to sales (CAS) are closer to current copper prices of $3.10 per pound, leaving it less room to deal with Indonesia. Its North American first quarter 2014 copper CAS came in a $2.39 per pound, while its Australian/New Zealand operations posted a copper CAS of $2.63 per pound. Newmont hopes to bring its overall copper CAS down to a range between $1.20 and $1.45 by 2015, but it remains to be seen how Indonesia will play out.

Newmont's big challenge is its dependency on gold as gold prices are heavily dependent on volatile investor sentiment. Newmont expects that its gold all-in sustaining costs will remain around $1,000 per ounce, which leaves limited room for other expenses. 

Newmont, Freeport-McMoRan and Vale are not the only miners dealing with increased resource nationalism. The copper miner Southern Copper (NYSE:SCCO) has big mines in Peru and Mexico.

Mexico recently put a 7.5% mining tax on sales less a number of deductions. From the first quarter of 2013 to the first quarter of 2014, Southern Copper's operating income fell 27.3%, but its income and royalty taxes only fell 14.5%. The good news is that Southern Copper's first quarter 2014 operating copper cash cost after by-products was just $1.02 per pound, which is far away from current prices.

Southern Copper's status as a low-cost producer protects it from adverse political movements.

Focus on the big picture
Indonesia will not be resolved with a snap of the fingers. Freeport-McMoRan's diversifying oil and gas operations and Vale's iron ore operations make Indonesia a manageable issue. Newmont, on the other hand, has reason to worry given its exposure to the volatile gold industry. Its lack of Indonesian refining capacity is just one more headache.