Presidential Palace to Ponder Freeport Divestment Price

http://www.globalindonesianvoices.com/32934/presidential-palace-to-ponder-freeport-divestment-price/

Presidential Palace to Ponder Freeport Divestment Price

Posted On 07 Jun 2018By : Leo Jegho Comment: 0Tag: Divestment, Freeport, Inalum, Indonesia, news

Current Indonesian laws, which followed the rising tide of economic nationalism, oblige foreign-owned mining firms to divest 51 percent of their projects to the government.

Freeport’s Grasberg mine in Papua. (Photo source: Kompas/Agus Susanto)

Jakarta, GIVnews.com – President Joko ‘Jokowi’ Widodo has reportedly received a proposal on the purchase price for Rio Tinto’s 40 percent participating interest in a giant copper and gold mining project in Papua. Owned by PT Freeport Indonesia (PTFI), the Grasberg pit is the world’s largest gold mine and third largest copper mine.

While different unconfirmed price figures had filled the air over the past days, Kontan.co.idreported on Wednesday (6/6) that Rio Tinto had proposed US$5 billion for the 40-percent stake being offered to the Indonesian government.

PTFI is a subsidiary of US-based mining giant Freeport-McMoRan Copper & Gold Inc. Meanwhile, Rio Tinto is an Australian-British multinational and one of the world’s largest metals and mining corporation.

Quoting an unidentified source, Kontan.co.id mentioned that State Enterprises Minister Rini Soemarno had submitted Rio Tinto’s price proposal to the President. The source reportedly also said that Maritime Affairs Coordinating Minister Luhut Panjaitan viewed the proposed $5 billion as too high. That amount is much higher than the potential $3.5 billion purchase price previously reported by Reuters.

But, Fajar Harry Sampurno, State-owned Enterprises Ministry’s mining and strategic industry deputy, denied that Rio Tinto had proposed $5 billion for its interest in Grasberg. While not mentioning the actual price proposed, Fajar Harry only said that the State Palace would discuss that matter. “And the President will decide whether or not to accept (the proposal),” the official told Kontan.co.id.

The government had appointed state-owned mining holding company PT Indonesia Asahan Aluminium (Inalum) to negotiate with PTFI and Rio Tinto on the 40-percent stake. That move is part of an agreement for Indonesia to acquire 51 percent state in Grasberg mine through PT Inalum.

Meanwhile, it had been decided that transaction for Rio Tinto’s 40 percent interest will take place by 2019. Current Indonesian laws, which followed the rising tide of economic nationalism, oblige foreign-owned mining firms to divest 51 percent of their projects to the Indonesian government.

You may also be interested in this article: Digging the World’s Largest Gold Mine, What is Freeport?

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