PT Freeport divestment likely via IPO

Gold and copper giant PT Freeport Indonesia is likely to carry out its mandatory divestment program via an initial public offering (IPO) after the government opens the possibility for the IPO option, Investor Daily reported on Thursday.

The paper quoted newly-appointed President Director of PT Freeport, Chappy Hakim as saying that Minister of Energy and Mineral Resources Ignasius Jonan during a recent meeting with the company has requested for the firm to make preparations for selling shares via the IPO mechanism.

Chappy said that the IPO mechanism is line with the company?s wish, expressed last year. ?There are many technical matters that must be prepared, But the IPO is likely to be the solution taken (for implementing the mandatory divestment program),? he said during a meeting with journalists on Wednesday.

PT Freeport, a subsidiary of US-based Freeport McMoRan Copper & Gold Inc, is obliged to sell 10.64 percent shares to Indonesian investors. The divestment program, however, has been stalled due to disagreement over the price. While the company demanded a price of US$1.7 billion for the shares, 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.

Ministry spokesman said last week that the government is preparing a new regulation that would allow mining firms controlled by foreign investors to carry out their mandatory divestment program via IPO mechanism. (*)