Thursday, September 27, 2018

1) Indonesia now holds majority of shares of Freeport

2) Freeport, Rio formally yield control of giant Grasberg mine to Indonesia

1) Indonesia now holds majority of shares of Freeport

Jakarta, (ANTARA News) - The Indonesian government officially became the majority shareholder at PT Freeport Indonesia following the signing of a number of agreements at the Ministry of Energy and Mineral Resources here on Thursday.

"Yes, the divestment process in PT Freeport has now been finished, leaving only the administrative process that has to be completed by Freeport and Inalum," Energy and Mineral Resources Minister Ignasius Jonan said, after witnessing the signing of the agreements.

Indonesian state-owned mining holding company PT Inalum, Freeport McMoRan Inc. (FCX) and Rio Tinto signed a number of agreements to follow up the Head of Agreement regarding the sales of CFX shares and Rio Tinto`s participating right in PT Freeport Indonesia to PT Inalum here on Thursday.

The agreements include PT FI`s divestment agreement, PT Rio Tinto`s shares sales and purchase agreement, and an agreement on PT FI shareholders.

The agreements were signed by PT Inalum`s president director Budi G.Sadikin and FCX`s CEO Richard Adkerson, witnessed by Minister Jonan, State Enterprises Minister Rini Soemarno and Finance Minister Sti Mulyani.

Under the agreements, PT Inalum`s shares at PT FI have now increased from 9.36 percent to 51.23 percent, while the regional governments of Papua will receive 10 percent of 100 percent shares of PT FI.

The change in the shareholding will be official after payment of US3.85 billion (Rp56 trillion) to CFX, which is to be completed before the end of this year.

"Following the signing of the agreements, the government will issue IUPK (mining license) for a period of 2x10 years until 2042," Jonan said.

PT FI`s obligation to build a copper smelter with a capacity of 2 to 2.6 million tons would continue to be monitored and evaluated with regard to its progress, Jonan said, adding that the project was expected to finish in less than five years.

Minister Rini Soemarno said Inalum`s commitment to meeting the target of the settlement of the divestment was worth praising.

Finance Minister Sri Mulyani, on the other hand, said, "With regard to support investment for Freeport and Inalum, the government had given certainty regarding tax obligations and non-tax obligations at national and regional levels that must be met by PT FI."

With the conclusion of the divestment process, and following a change from a working contract (KK) to a mining business license (IUPK) system, it is assured that PTFI`s contribution to state income will be larger in the aggregate.

Reporting by Afut Syafril Nursyiwan
Editing by Yoseph Haryadi

Editor: Suharto

2) Freeport, Rio formally yield control of giant Grasberg mine to Indonesia
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Freeport McMoRan (NYSE:FCX) and Rio Tinto (LON:RIO) signed Thursday final agreements that give Indonesia a majority stake in their Grasberg copper mine, the world's second-largest, and which would be transferred to the state-owned mining company PT Indonesia Asahan Aluminium (Inalum).
The "definitive" and "binding" agreements end a long-drawn-out, three-way dispute over the mine, centred on bringing Indonesian ownership up to 51%, a main requisite set by the government to allow Freeport-McMoRan, operator of Grasberg, to keep doing so.
It could also bring closure to years of disagreements between the Phoenix, Arizona-based copper miner and the country’s government, which last year curbed output at the mine, impacting metals prices worldwide.

The transfer of majority shares to Inalum will happen once the miner makes a payment of $3.9 billion to Freeport and Rio Tinto, Energy and Mineral Resources Minister Ignasius Jonan said in a statement.
As announced earlier this year, once Inalum becomes Grasberg's majority stakeholder, the government will issue a special mining license extension to Freeport allowing ore extraction until 2041.
The permit, known as an IUPK, is the “government’s commitment to maintaining the investment climate so as to provide certainty and security to foreign investors to invest in Indonesia,” minister Jonan noted.
The authority added that Freeport’s local unit will have to build a copper smelter with a capacity of 2 to 2.6 million tons per year, which should be completed in less than 5 years.
PT Freeport Indonesia is already drafting a roadmap to manage all environment-related issues surrounding the facility, Minister for Environment and Forest Siti Nurbaya said in the statement.

Government's victory

Today's deal is considered a victory for President Joko Widodo, who faces re-election in 2019 and who has insisted that mining companies must divest majority stakes in order to continue operating in the country.
Grasberg, the world’s second-largest copper mine and fourth largest gold operation, is transitioning to an underground operation, set to reach full capacity by 2022, when it will produce 160,000 tonnes per day of ore.
The additional Deep Mill Level Zone block cave mine, currently under construction, is projected to contribute an additional 80,000 tonnes per day of ore once at full capacity, expected in 2021.
Currently, Grasberg’s reserves are estimated to be worth about $14 billion. Lasst year it accounted for 47% of Freeport’s operating income, according Bloomberg Intelligence.

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