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Govt plan to increase Freeport stake ‘unnecessary’, expert says
The government’s plan to increase its stake in gold and copper mining company PT Freeport Indonesia (PTFI) may be an unnecessary burden on state-owned mining holding company MIND ID, experts contend.
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This stock photo shows a worker at a nickel smelter in Sorowako, South Sulawesi, on Aug. 1, 2019. (Shutterstock/Kaisarmuda)
T
he government’s plan to increase its stake in gold- and copper-mining company PT Freeport Indonesia (PTFI) may be an unnecessary burden on state-owned mining holding company PT Mineral Industri Indonesia (MIND ID), experts contend.
Indonesia owns around 51.2 percent of PTFI through MIND ID, while United States-based mining giant Freeport McMoRan owns the remaining 48.8 percent.
Bisman Bakhtiar, executive director of the Center for Energy and Mining Law (Pushep), said increasing Indonesia’s stake in PTFI would be an “ill-advised decision” for MIND ID, considering that operational control over PTFI would still remain with Freeport McMoRan.
“MIND ID has to focus on developing the downstream industry and on what they already have on their plate, considering PTFI’s lagging copper-smelter construction,” he told The Jakarta Post on Wednesday.
“The slow progress reflects a hiccup in Indonesia’s downstream industry development. Freeport will still continue exporting copper ore until next year,” he added.
Aluminum-mining firm Indonesia Asahan Alumunium (Inalum), which is now a subsidiary of MIND ID, bought the stake in PTFI for US$3.85 billion in October 2018. The multibillion-dollar acquisition and several hefty infrastructure investments caused its debt to skyrocket 378 percent year-on-year (yoy) in the third quarter of 2019.
MIND ID’s revenue increased 34 percent from Rp 93.75 trillion (US$6.3 billion) to Rp 126 trillion in 2022 on the back of rising commodity prices. Meanwhile, the company saw its profit rise 53.5 percent yoy to Rp 22 trillion.
