Debate over Freeport divestment continues

The debate over the divestment of PT Freeport Indonesia continues with more people asking the world’s copper and gold giant U.S.-based Freeport McMoran to divest part of its shares in the company to national companies.

Director General of Geology and Natural Resources Simon Sembiring, however, told Bisnis Indonesia on Thursday that with the issuance of the government regulation No. 20/1994 which allows foreign investors to have 100 percent stake in a locally established firm, Freeport had no obligation any more to divest its shares.

“The stipulation is clearly stated in the contract of works issued to Freeport,” he said.

Earlier, a government source said that Freeport, which operates a vast gold and copper mine in Papua, will be required to divest its shares to Papuan people as part of the condition to be imposed for the merger of Freeport and Indocopper.

At present, Freeport is waiting for the government’s approval for its merger with Indocopper, which was previously controlled by former president Soeharto’s golf buddy Bob Hasan.

Bob Hasan recently sold Indocopper which owned 9.36 percent stake in Freeport Indonesia to Freeport McMorran, the majority shareholder of Freeport Indonesia. As part of its business consolidation, Freeport McMoRan planned to merge Indocopper into Freeport Indonesia. This will increase its ownership in the world’s copper and gold giant to 90.64 percent from 81.6 percent at present. The remaining 9.6 percent are held by the Indonesian government.

Meanwhile, another sources at the office of the state minister for the supervision of state owned enterprises said that Freeport could not use the government regulation No 20/1994 to escape from the divestment. “The regulation is not for mining companies,” he said. (*)