“By [April], the final draft of the IUPK [special mining permit] must be ready and all matters that have been discussed with the company should be completed as well,” Energy and Mineral Resources Minister Ignasius Jonan told a press conference on Monday evening.

Since early 2017, the Jokowi administration has been negotiating intensely with American mining giant Freeport-McMoRan Copper & Gold Inc., the parent company of PTFI, on the terms of its future operations in the country. PTFI operates the Grasberg mine, the world's largest gold mine and second largest copper mine.

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The government's demand included increased Indonesian ownership in PTFI from 9.36 percent to 51 percent in return for an extension to PTFI's operating permit. PTFI is also expected to convert its contract of work (CoW) into the special mining permit (IUPK) and build a new smelter by January 2022.

Jonan said the government would purchase the remaining 41.64 percent of PTFI’s shares at the fairest price through a scheme that involved Anglo-Australian mining giant Rio Tinto and PT Indocopper Investama, another Freeport-McMoRan subsidiary that also controls 9.36 percent of PTFI. 

Rio Tinto has the option to obtain a 40 percent interest in all output from Grasberg’s Block A after 2022. The government then intends to acquire Rio Tinto’s 40 percent interest, which would be converted into shares through a rights issue.

This would dilute the shares held by the government and Indocopper to around 5.5 percent each. The government plans to then acquire Indocopper’s shares in PTFI, thereby finally controlling a 51 percent majority stake in PTFI. (gda)

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