Freeport required to start divestment obligation next year
Friday, November 14 2014 - 02:32 AM WIB
According to the regulation, issued by the previous administration of president Susilo Bambang Yudhoyono on October 14 of this year as a revision to Government Regulation No 24/2012, Freeport Indonesia is obliged to divest only up to 30 percent stake, lower than the 51 percent divestment obligation set in the previous regulation.
Director General of Mineral and Coal R. Sukhyar said on Thursday that mining companies engaged in underground mining operation such as Freeport Indonesia will be allowed to divest only 30 percent stake, while integrated mining companies such as nickel giant PT Vale Indonesia Tbk is required to divest 40 percent shares to Indonesian investors.
Freeport Indonesia, which is 90.64 percent owned by US-based Freeport McMoRan Copper & Gold Inc, and 9.36 percent owned by the Indonesian government, is required to divest a total of 20 percent shares to Indonesian investors in the first year since the issuance of the new regulation.
As 9.36 percent is already held by the Indonesian government, Freeport Indonesia is required to only divest another 10.64 percent shares to Indonesian investors before October 14 of next year, Sukhyar explained. Freeport must complete the divestment obligation by October 14, 2019.
Elsewhere, he dismissed suggestion that the new regulation was a result of lobbying by foreign giant miners such as Freeport.
According to the regulation, Freeport must first offer the shares to the Indonesian government. If the latter declines to exercise it, the shares can then be offered to Indonesian private investors.
Sukhyar said the Ministry of Finance will make a valuation of the value of the 10 percent shares to be divested by Freeport, which should be a discount to the market value earlier claimed by Freeport of about US$2 billion. (*)