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Jakarta Post
The Jakarta Post
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11 banks to fund Inalum in buying Freeport shares

  • News Desk
    News Desk

    The Jakarta Post

Jakarta | Fri, July 13, 2018 | 11:37 am
11 banks to fund Inalum in buying Freeport shares A worker at an unidentified Freeport Indonesia facility in Papua monitors the mineral flotation process to produce copper, gold and silver concentrate. (Kompas/B. Josie Susilo Hardianto)

State-owned mining holding company PT Indonesia Asahan Alumunium (Inalum) has obtained the support of 11 banks to buy 51 percent of gold and copper miner PT Freeport Indonesia’s (PTFI) shares to complete the divestment deal.

Inalum needs US$3.85 billion to finalize the deal by the end of 2018, as scheduled.

“There are 11 banks that are ready to disburse funds for the transaction. We cannot disclose [the banks] yet,” Inalum president director Budi Gunai said on Thursday, after signing the deal with PTFI at the Finance Ministry.

Budi also did not provide details on the balance of funds Inalum required in order to purchase the shares, but he mentioned that the holding company currently had nearly $1.5 billion in cash.

Of the $3.85 billion needed to complete the divestment, $3.50 billion is to be used to purchase Rio Tinto’s participating interest in PTFI, which will then be converted into shares. The remaining $350 million is be used to buy the 100 shares American mining giant Freeport McMoRan owns in PTFI.

“We expect all transactions to be completed within the next two months, so that we can [close the deal],” said Budi.

The government inked on Thursday a heads of agreement (HoA) with Freeport McMoRan on the divestment of PTFI, which operates Grasberg, the world’s largest gold mine.

The deal is part of last year’s agreement between the government and Freeport on four requirements: increasing Indonesian ownership in PTFI from 9.36 percent to 51 percent, developing a smelter within five years, ensuring investment stability, and changing PTFI’s contract of work (CoW) into a special mining permit (IUPK). (bbn)

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