Holding State-Owned Mining will Buy PT Freeport Shares

By : Herry Barus And Aldo Bella Putra | Saturday, November 25 2017 - 15:00 IWST

Menuju Holding BUMN Industri Pertambangan
Menuju Holding BUMN Industri Pertambangan

INDUSTRY.co.id - Jakarta - State Ministry of State-Owned Enterprises (BUMN) states that state-owned mining companies will purchase PT Freeport Indonesia's shares by utilizing loans from state-owned bank funds if the funding from equity holding is insufficient.

"If the funding is enough from the holding equity, then it is already completed, if there is not enough, then there will be a bank loan," said Deputy of Mining Business, Strategic Industries and Media at BUMN Ministry, Harry Sampurno, Friday (24/11 / 2017)

Harry explained that the role of government banking will be needed as Medco acquired Newmont.

"If Medco is assisted, we will not be assisted by state-owned companies, we will be assisted by government banks because this is a form of synergy," he said.

Harry said that when consolidated, the holding equity of the mine reached Rp64.6 trillion or Rp65 trillion. The amount, he added, will be able to increase its funding capability up to three times so it will not interfere with the financial performance of the company.

These conditions will be very different if the company is still not incorporated in one holding.

"Once the holding of Rp65 trillion is doubled to Rp120 trillion, the three-fold rule of thumb is safe," he said as quoted by Antara.

The value, continued Harry, has included a 9.36 percent stake in Freeport shares.

There is also the remaining value of the divestment of shares to be annexed by the Indonesian government up to 51 percent cannot be known because it is still in the negotiation phase.

"Let's put the figure at 3 billion US dollars. Well, we leverage it was twice as much as Rp120 trillion, so I do not need to explain again," he assured the mine holding capability to buy the divestment of shares of the US mining company.

PT Indonesia Asahan Alumunium (Inalum) will become the holding company of state-owned mining industry, while PT Aneka Tambang Tbk, PT Bukit Asam Tbk and PT Timah Tbk will become subsidiaries (holding members).

Holding the mine aims to improve business and funding capacity, management of mineral and coal resources, enhancement of added value through downstream and increase local content and cost efficiency synergies. In addition, another purpose of holding form is to control 51 percent of Freeport shares that have been agreed to be divested by the Indonesian government.

In the short term, the holding which will be officially approved on 29 November will soon conduct a series of corporate actions including the construction of a smelter grade alumina plant in Mempawah, West Kalimantan, with capacity up to 2 million tons per year; Ferro Nickel plant in Buli, East Halmahera, with a capacity of 13,500 tons per year; and the construction of a steam power plant at a downstream mill down to 1,000 MW.

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