Freeport will be required to divest at least 40% stake

The government is currently drafting a new regulation to specifically arrange the divestment obligation of integrated and underground mining companies such as PT Freeport Indonesia, Kontan daily reported on Wednesday.

The paper quoted Director General of Mineral and Coal R. Sukhyar as saying that the draft of the regulation was still being discussed at the Office of the Coordinating Minister for the Economy.

He did not say the size of shares that must be divested by Freeport Indonesia under the planned new regulation. But he said that for integrated and underground mining companies, the minimum divestment is 40 percent. ?There are not many underground mines in Indonesia. They?re pioneers, so we?ll give them some room,? he said.

The divestment obligation for foreign mining companies operating in Indonesia is one of the sticking points of the ongoing protracted contract renegotiation between the government and the miners as mandated by the 2009 Mining Law. Existing regulations require foreign mining firms to divest up to 51 percent of their stake to the Indonesian government or other local investors.

Freeport Indonesia earlier indicated that it was willing to divest up to 20 percent of its stake until its contract of work expires in 2021. (*)