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29 June 2020 (closed)
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There is still no agreement between Indonesia and Freeport Indonesia regarding the sale of a 10.64 percent stake in Freeport Indonesia. Indonesia's Ministry of Energy and Mineral Resources objected to the USD $1.7 billion asking price for the stake in Freeport Indonesia, the local unit of US mining giant Freeport McMoRan. Based on Indonesian Government Regulation No. 77/2014 on the Implementation of Mineral and Coal Mining Business Activities, Freeport Indonesia is required to divest a 30 percent stake (to an Indonesian party) before 2019.
Currently Freeport McMoRan owns a 81.28 percent stake in Freeport Indonesia and - indirectly - another 9.36 percent through Indocopper Investama. The remaining 9.36 percent are owned by Indonesia's central government.
Bambang Gatot, Director General of Mineral and Coal at Indonesia's Ministry of Energy and Mineral Resources, informed reporters that the government objects to Freeport Indonesia's asking price of USD $1.7 billion for a 10.64 percent stake. He said the government has made its own calculation for the price. However, Gatot will keep this price secret from the public until after further negotiations with Freeport.
Based on Indonesian Government Regulation No. 77/2014 on the Implementation of Mineral and Coal Mining Business Activities, the 10.64 stake in Freeport Indonesia will first be offered to the central government (which has a 60-day period - starting after both sides agree on the price - to decide whether or not to buy the stake). If the central government will not purchase the stake then the offer will go to the local government. If the local government decides not to buy the stake then it will be offered to (local) state-owned companies, and, lastly, to private Indonesian companies. Previously, Freeport Indonesia also studied the possibility to divest the 10.64 percent stake through an initial public offering (IPO) on the Indonesia Stock Exchange (IDX).
Previously it was also reported that Rini Soemarno, Indonesia's Minister of State-Owned Enterprises, assigned two state owned firms - Indonesia Asahan Alumunium (Inalum) and nickel & gold producer Aneka Tambang (Antam) - as the lead consortium to purchase the stake in Freeport Indonesia.
Freeport Indonesia operates the Grasberg Mine in Papua (the world's largest gold mine and third-largest copper mine). However, its contract will expire in 2021. Although talks about a 20-year extension can only start in 2019 (due to local laws), several Indonesian government officials have hinted at approval for the extension (moreover an agreement signed in the 1990s allows Freeport to extend the contract by another 20 years). However, Indonesia is well-known for its flip-flop policies and therefore there remains uncertainty about the extension of the contract.