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Freeport, govt butt heads over divestment details
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A vehicle passes through gold and copper miner PT Freeport Indonesia’s (PTFI) mining area in Grasberg, Mimika, Papua. (JP/Nethy Dharma Somba)
T
he positive response over the government’s success in making Freeport McMoRan (FCX) agree to give up 51 percent of its shares seems to be premature, as the American mining giant’s letter showing strong rejection of the government’s divestment proposal has come to surface.
After a series of negotiations tracing back to 2009, FCX CEO Richard Adkerson publicly announced last month that the firm had agreed to divest down FCX’s stake in PTFI to 49 percent from the current ownership of 90.64 percent.
Since then, the two parties have gone back to the drawing board to whittle down the details of the divestment. However, a letter leaked over the weekend seems to show things are not going so smoothly.
The letter, dated Sept. 28 and signed off by Adkerson, was addressed to the Finance Ministry’s secretary-general, Hadiyanto, and was strongly worded to demonstrate FCX’s disagreement with a proposal the ministry had sent earlier in the day.
“We view the Sept. 28 proposal to be entirely inconsistent with our discussions and understanding with the government and this proposal does not reflect the ‘win/win’ spirit in which the framework was reached,” the letter read.
Freeport, it further wrote, was prepared to discuss a path forward but could not negotiate on the basis of the government’s Sept. 28 proposal. “Until such time as a definitive agreement, it is reached through these negotiations, Freeport will continue to honor and abide by the CoW [contract of work] and fully reserves its rights thereunder.”
The global mining giant refused in the letter to comply with the government’s request to divest the remaining 41.64 percent to national entities by the end of next year through a rights issue.
