Government plans IPO option for mining firms to divest shares
Friday, November 18 2016 - 02:22 AM WIB
Ministry Spokesman Sujatmiko was quoted by reports as saying that the IPO option was disclosed by Minister of Energy and Mineral Resources Ignasius Jonan during a meeting late Wednesday with miners.
He said that the ministry will issue a new regulation as legal umbrella for the IPO option in carrying out the mandatory divestment program of mining firms owned by foreign investors. He said that the IPO option forms part of efforts to accelerate the ongoing renegotiation of mining contracts with miners.
The government is pushing to complete the renegotiation of mining contracts with miners as mandated by the 2009 Mining Law. Among of the six main issues in the contract renegotiation is the obligation for the mining firms to carry out the mandatory divestment program. Of the total 34 mineral mining contracts (KK), only nine have been amended, while of the 74 coal contracts of work (PKP2B), so far only 22 have been adjusted to the terms as set in the 2009 Mining Law.
According to Government Regulation No 77/2014, foreign mining firms operating in the country which have been in production stage for five years are required to divest its stake to local investors gradually up to 51 percent.
Gold and copper giant PT Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Coper & Gold Inc, has agreed to divest 10.64 percent shares to local investors. But it has yet to reach agreement on the price of the shares to be divested. While the company demanded a price of US$1.7 billion, based on market value and assumption that its contract will be extended until 2041, the government said the value of the shares is only $630 million, calculated based on the replacement cost.
PT Freeport Spokesman Riza Pratam was quoted by Bisnis Indonesia as saying that the company will work closely with the government if IPO can be an option for the divestment process. (*)