Papua administration negotiating to purchase Freeport's stake

The provincial administration of Papua is negotiating to buy 9.3 percent of Freeport Indonesia's shares, which would be divested by the gold and copper giant's majority shareholder Freeport McMoRan copper & gold Inc, Investor Daily reported on Wednesday.

"Negotiations to buy Freeport's 9.3 percent stake are underway," Papua governor Barnabas Suebu said Tuesday. He was optimistic that the Papua administration would be able to secure the funding for the share purchase although it would cost the local government a lot to buy the company's 9.3 percent shares, which would reach over US$1 billion.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro had said that Freeport had to divest the 9.3 percent stake to local investors as part of the mandatory divestment program.

"If the local government is unable to use its rights to buy the shares, we will then ask Freeport to sell the shares to national companies," he said.

Meanwhile the ministry's director general of coal, mineral resources and geothermal Simon Felix Sembiring said that Freeport had actually been exempted from the mandatory divestment program because under the existing foreign investment regulation, foreign shareholders were allowed to own up to 100 percent of the company's shares.

However, based on agreement between the government and the majority shareholder Freeport McMoRan, the latter had agreed to divest the 9.3 percent stake it owns through Indocopper Investama.

At present, Freeport is jointly owned by Freeport McMoRan Copper & Gold (81.28 percent), Indocopper Investama (9.36 percent) and the Indonesian government (9.36 percent). (*)