Freeport?s divestment must be implemented: Govt

Copper and gold miner PT Freeport Indonesia must fulfill its contract obligation to carry out divestment program, the Office of the State Minister of State Enterprises said.

The Koran Tempo daily quoted deputy ministery for strategic industries, mining and telecommunications Roes Aryawijaya as saying over the weekend that the Freeport Indonesia divestment program must continue despite the company's merger plan with PT Indocopper Investama.

?The rule says like that. Because the clause (for the divestment) was there in the contract of work,? Roes said.

Earlier however, Director General of Geology and Natural Resources Simon Sembiring said 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.

Freeport planned to merge with Indocopper in order to improve efficiency within the company?s operation. Both Freeport and Indocopper are owned by the United States-based Freeport McMoRan.

At present Freeport is owned by Freeport McMoRan (81.28%), the Indonesian government (9.36 percent) and Indocopper (9.36 percent). After the merger, the share ownership composition will changes with Freeport McMoRan owning 90.64 percent and the Indonesian government (9.36 percent).

The merger plans, however, still needs approval from the minister of energy and mineral resources. (*)