Irian Jaya plans to acquire more shares in Freeport may not be easy

The plan by the Irian Jaya administration acquire more stake in gold and copper mining giant PT Freeport Indonesia from the hands of local investor PT Nusamba may not be easy despite support coming from Freeport and Taufik Kiemas, the husband of President Megawati Soekarnoputri.

A source said that the Nusamba?s stake in Freeport was now in the hands of overseas banks, not in the hands of the Indonesian Bank Restructuring Agency (IBRA) as previously said by Irian Jaya Governor previously.

The source said that Nusamba borrowed the money from the overseas banks to finance the acquisition of around 10 percent shares in Freeport in 1997 from the Bakrie Group. The cost of purchase at the time was US$315 million.

The source said that the Irian Jaya administration would have to pay much more than that to acquire the stake because Nusamba had to pay a greater debt as a result of a plunge in the value of the rupiah against the dollar since the 1997 financial crisis.

The plan to acquire more stake in Freeport was disclosed to reporters by the Irian Jaya Governor following talks in Houston, U.S., with Freeport McMoRan top executives and Taufik Kiemas.

Freeport operates a large gold mining site in Irian Jaya.(Amoros)