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Freeport denied IPO request, must give govt priority
Freeport Indonesia, a subsidiary of US-based giant Freeport McMoRan Inc
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Freeport Indonesia, a subsidiary of US-based giant Freeport McMoRan Inc., must divest a further 10.64 percent of its shares to the Indonesian government by Oct. 14, giving the latter 20 percent ownership. (Antara) (Antara)
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span class="inline inline-center">Freeport Indonesia, a subsidiary of US-based giant Freeport McMoRan Inc., must divest a further 10.64 percent of its shares to the Indonesian government by Oct. 14, giving the latter 20 percent ownership. (Antara)
The Energy and Mineral Resources Ministry has refused giant copper and gold miner PT Freeport Indonesia's request to conduct an initial public offering (IPO) to comply with share divestment requirements for foreign mining companies.
The ministry's director general for minerals and coal, Bambang Gatot Ariyono, said Freeport Indonesia must follow the existing divestment mechanism, in which priority for buying shares from the company must be given to the government.
"Divestment will not be conducted through an IPO, but by giving the government priority to purchase shares of the company. We should follow this rule," said Bambang to thejakartapost.com on Tuesday.
He further said that according to the existing regulation, the priority to purchase foreign mining companies' shares went to the central government and provincial, regental and municipal administrations. The second priority, he said, went to state-owned enterprises and enterprises owned by local administrations (BUMD) while the last priority would be given to private companies.
Under government regulation (PP) No.77/2014 on mineral and coal-mining business activity, Freeport must divest 10.64 percent of its shares to the government by Oct. 14. After accepting the offer, the government has 90 days to negotiate with Freeport.
"We will consider their offer. It will be evaluated later to decide if the share price is fair," Bambang said.
Earlier, Freeport Indonesia expected to be allowed to conduct an IPO to comply with the mandatory divestment regulation imposed by the government. The company's spokesperson Riza Pratama said divesting shares would be more transparent and accountable that way.
Freeport Indonesia, a subsidiary of US-based giant Freeport McMoRan Inc., intends to meet the government's requirement that it divests 30 percent of its shares to Indonesian parties. The share divestment is part of a deal between the company and the government as they re-negotiate Freeport's contract of work (CoW) as mandated by the 2009 Mining Law.
Freeport Indonesia is currently 90.64 percent owned by Freeport McMoran and 9.36 percent owned by the Indonesian government. To meet the government's requirement, the company must offer another 20.64 percent of its shares to Indonesian shareholders. According to the current schedule, Freeport Indonesia must divest a further 10.64 percent of its shares in October. (ebf)(++++)
