Indonesia lays groundwork for transfer of Grasberg mine to local control

Evarado Alatorre
Enero 13, 2018

Grasberg is the world's second-biggest copper mine and is located in the eastern Indonesian province of Papua.

Indonesia and Freeport agreed in principle in August to set up the US company's rights to Grasberg under a new mine license system from an existing contract of work, and the American miner said it would divest up to 51 percent of its local unit to "Indonesia interests".

Inalum said Friday it was grabbing a 41.64% stake in the local unit of Freeport, which increases its current ownership in it to 51%.

"This portion of share ownership rights is for the interests for the indigenous land owners and members of the community facing permanent impacts (from the mine)", she said.

The agreement allows the Indonesian parties to act as a consortium in the acquisition, funding for which will be provided by Inalum and will not be taken from the central or regional government budgets, Ms Indrawati said.

The move will increase the state-owned company's ownership to 51% from 9.36%, which is now held by the government.

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A Freeport Indonesia spokesman, Napoleon Sawai, said last month that Jakarta values the stake at $4 billion, while the USA company values it between $12 billion and $13 billion.

Disagreement on the valuation of Grasberg may hold up a deal, analysts have said.

The 10 per cent to be held by Papua and Mimika will be part of this Inalum holding, Inalum chief executive Budi Gunadi Sadikin said. "We're still waiting for the outcome", Bambang Gatot Ariyono, director general of minerals and coal at the ministry, told reporters at a press conference.

Freeport's divestment may involve liquidation of a joint venture that Freeport Indonesia, operator of Grasberg, formed with Rio Tinto in 1996.

The price of the transaction has yet to be agreed upon, Dow Jones Newswires reports.

A Melbourne-based spokesman for Rio declined to comment.

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