Process of Freeport take-over wrapped up in April: Jonan
Energy and Mineral Resources (ESDM) Minister Ignasius Jonan said that the long brain racking negotiations with PT Freeport Indonesia is expected to be wrapped up in April this year.
“The President wants that the process of the government taking over 51 percent of Freeport is to be completed before the end of April,” Jonan said here on Tuesday.
PT Freeport Indonesia (PT FI) has agreed to divest up to 51 percent of its share to the Indonesian government. The decision is an implementation of the Government Regulation (PP) No. 1 of 2017 on revision of PP No 23 of 2010 about coal and mineral mining activities.
PT Freeport Indonesia, a subsidiary of the U.S. mining giant McMoRan Copper & Gold, has a big copper and gold mine in Papua.
Jokowi wants to see that the divestment of the 51 percent stake, which is seen as a symbol of the state sovereignty over its natural wealth, became a reality as soon as possible.
Jonan said the government would buy the participating interest of Rio Tinto, and Freeport Mc Moran stake in PT Indocopper.
“We will buy at a price as reasonable as possible until the government has a majority 51 percent stake in line with instruction of the President. We will take over the 40 percent participating interest of Rio Tinto to be converted into share and the rest in PT Freeport Mc Moran`s stake in PT Indocopper Investama,” the minister explained.
Jonan said the government did not want to put off the take-over until the end of the contract of PT Freeport in 2021.
“If we wait until 2021, we have to pay at book price of all investment Freeport already made instead of the value of the mine,” he said
About the possibility of PT Freeport filing a protest against the government with an international arbitration for not waiting until the end of the contract, Director General of Mineral and Coal Bambang Gatot Ariyono said in one of the chapters of its contract, PT Freeport has the right to propose for contract extension, which is a point PT Freeport has to consider.
“The contract says the government could not reject the extension proposal without strong reason. As for the book calculation, we have no way of saying for certain which parts are replaceable. What is regulated for certain in the contract is that every goods changing ownership has to be replaced at a certain period,” Bambang said.
PT. Freeport Indonesia finally agreed with the divestment of the 51 percent stake to the Indonesian government after long exhausting negotiations. Negotiations, which became more intensive since April 2017 were on four main points — continuation of operation, share divestment, stability of investment and construction of smelter.
Negotiations on the four points have been concluded in an inseparable agreement package.
The results of the negotiations have been in line with the instruction of President Jokowi, to put first and foremost the national interest, the interest of the Papuan people, state sovereignty over natural resources and maintaining conducive investment climate, Jonan said.