Freeport Indonesia must divest additional 10% stake to government: minister
INDONESIA’S investment minister said on Wednesday (May 3) that copper miner Freeport Indonesia must agree to sell an additional 10 per cent stake to the government, as negotiations get underway for the US company to extend its permit to operate in the country.
Bahlil Lahadalia said that the government will seek the cheapest pricing possible to increase its stake from 51 per cent to 61 per cent in Freeport-McMoRan’s Indonesian unit, which controls one of the world’s largest copper mines.
“We ask for Freeport’s 10 per cent divestment through a state company for as cheap as possible. I’m not asking to see the valuation,” he said in an interview, adding that Freeport must agree to this requirement to be able to extend its mining permit which currently runs to 2041.
“If we are not thinking about this now, in 2041 there will be job losses and Papua’s economy will be impacted,” Bahlil added, referring to the region where Freeport’s flagship Grasberg mine is located.
According to him, Freeport would also be required to build a smelter in Papua in addition to the US$3 billion project it is building in East Java. Partnership with Papuan businesses and meeting environmental standards would also be part of the negotiations, Bahlil noted.
The US$3.85 billion that Indonesia invested in the miner in 2018 via a state company has proven beneficial for the country, and the government expects to break even on that deal next year, he pointed out.
Although details of the new deal are still being discussed, he said, it is crucial for both parties to finalise Freeport’s permit extension as early as possible to avoid a dip in output.
Freeport Indonesia said that it produced three million tonnes of copper concentrate in 2022, an annual record. The miner has in recent years transitioned into underground mining at Grasberg. REUTERS
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