Government expects state pension funds to acquire PT Freeport shares

Petromindo

The government hopes pension funds controlled by the state to be able to acquire shares in gold and copper giant PT Freeport Indonesia to be divested by the company under the mandatory divestment program, Kontan reported on Wednesday.

The government last week issued a new Government Regulation No 1/2017 which allows miners such as PT Freeport to continue export of mineral concentrates including copper concentrates produced by the firm for the next year five years under certain conditions including an obligation for foreign-controlled mining firms to gradually divest up to 51 percent of their shares to Indonesian investors.

?The direction of President Jokowi is for state-controlled pension funds (to acquire the PT Freeport stake),? Minister of Energy and Mineral Resources Ignasius Jonan said as quoted by the paper, referring to President Joko Widodo.

PT Freeport, a local subsidiary of US-based Freeport McMoRan Coper 7 Gold Inc, has been required to divest up 20 percent stake in the first stage. The government currently owns 9.36 percent stake in the company, and thus plans to divest another 10.64 percent stake. The company last year offered a price of US$1.7 billion for the 10.64 percent stake, but the government has said it is too expensive, insisting a much lower price of $630 million. PT Freeport?s price is based on the assumption that the company?s operation will continue until 2041, instead of only until 2021 as stated in the current contract.

Among of the major state-controlled pension funds include Dapen Telkom (pension fund of state-controlled telecom firm PT Telkom), Dapen Pertamina, Dapen Garuda, and BPJS Ketenagakerjaan (workers social security agency) with combined assets of Rp 172 trillion, according to the Financial Services Authority (OJK), Kontan said. (*)