Divestment of 51 Percent of Freeport Shares Expected To be Completed April 2018

By : Hariyanto And Aldo Bella Putra | Tuesday, March 06 2018 - 18:00 IWST

Menteri ESDM Ignasius Jonan
Menteri ESDM Ignasius Jonan

INDUSTRY.co.id - Jakarta - PT Freeport Indonesia (PT FI) has agreed to release 51% of its shares to the Government of Indonesia, the decision is the implementation of Government Regulation No. 1 of 2017 on Fourth Amendment of Government Regulation Number 23 Year 2010 on Implementation of Mineral and Coal Mining Business Activities.

The release of 51% shares which is a symbol of the country's sovereignty was requested by the President of the Republic of Indonesia, Joko Widodo to be completed before the end of April 2018.

"The President's directive that for the completion of the divestment of PT Freeport Indonesia if it can be before the end of April has been completed, the evaluation and so on and of course the Ministry of Energy and Mineral Resources IUPK final drafting is complete," said Minister of Energy and Mineral Resources (ESDM), Ignasius Jonan Monday (5/3/2018) afternoon.

Regarding the mechanism of divestment shares purchase, Jonan explained, the Government will buy shares from Rio Tinto's participating interest, and the rest from PT Freeport Mc Moran shares in PT Indocopper.

"We will buy at reasonable price until the stake of government ownership as directed by President 51% .One we will take over the participating interest of Rio Tinto 40% to be converted into shares and the rest will be taken from PT Freeport Mc Moran's share ownership in PT Indocopper Investama," said Jonan.

Jonan also explained why the Government did not wait for the ownership of PT Freeport Indonesia until the end of the contract period. "If we wait until the year 2021 we take over, according to Jonan we have to pay at least the book value of all Freeport investments that have been done there, not the value of mine" explains Jonan again.

Regarding the possibility of PT Freeport will submit to the international arbitration relating to the contract expiring in 2021, Director General of Mineral and Coal Bambang Gatot Ariyono said in the contract of PT Freeport in Article 32 stated that the company is entitled to apply for the extension so according to Gatot itupun is a problem that needs to be concern because PT Freeport feels it is still entitled to apply for a contract extension.

"In the contract it is stated that the Government cannot withstand it for no good reason, so that is the concern, as well as the calculation of the book, we cannot calculate exactly which parts can be replaced but which is clearly regulated in the contract of each of the goods owned by the company if you want to change hands or want to be owned by anyone or have termination it must be replaced or moved within a certain time," said Bambang.

PT. Freeport Indonesia has agreed on a 51% divestment-related decision to the Government of Indonesia. This decision is central to the outcome of the negotiations between the two parties.

More intensive negotiations since April 2017 discussed four main points: sustainability of operations, stock divestment, and investment stability and smelter development. The discussion of the topics for these four things has been completed in an inseparable package of agreements.

The results of this negotiation is in accordance with Presidential Instruction Jokowi, to promote the national interest, the interests of the people of Papua, the sovereignty of the state in natural resources and keep the investment climate remains conducive.

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