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Freeport to issue new shares to meet divestment requirement
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Soldiers guard the US-owned Freeport mine in Timika, Papua (Bloomberg/File)
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old and copper miner PT Freeport Indonesia is set to issue new shares that will be bought by the Indonesian government through a state-owned enterprise in an effort to divest 51 percent of its shares to local entities.
At present, American mining giant Freeport-McMoRan owns 90.64 percent of the company, while 9.36 percent is owned by the Indonesian government.
“The company [Freeport Indonesia] will issue new shares. So it’s not the existing shares that will be bought by us,” Energy and Mineral Resources Ministry secretary-general Teguh Pamudji said in Jakarta on Wednesday.
“The government and Freeport Indonesia will establish an independent valuation team that will calculate the value of the company’s shares. But the calculation won’t take into account the reserves [at the Grasberg mine in Papua].”
Under a contract of work (CoW) signed in 1991, Freeport Indonesia was initially required to sell 51 percent of its stake by 2011, or 45 percent if it had sold a minimum of 20 percent in the local stock market
However, a year before the 2011 deadline, then president Susilo Bambang Yudhoyono’s administration issued Government Regulation (PP) No. 23/2010, which would later be followed by three revisions until 2016, that allowed Freeport Indonesia to divest only 30 percent of its shares.
Earlier this year, President Joko “Jokowi” Widodo’s administration issued PP No. 1/2017, the fourth revision to PP No. 23/2010, forcing Freeport Indonesia to convert its CoW into a special mining license (IUPK) and to divest 51 percent of its stake within a decade.
