Rio Tinto may become hurdle in PT Freeport divestment

The government considers Rio Tinto could become a stumbling block in the ongoing process for gold and copper giant PT Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Inc, to implement its mandatory divestment program.

This was said by Fajar Harry Sampurno, Deputy at the Office of the State Minister of State Owned Enterprises on Friday. He revealed that following a funding and operation agreement between Rio Tinto and Freeport made in the 1990s, the former company holds rights over 40 percent of the operations and production of PTFI in Grasberg, Papua Province, through 2021.

He said that it remains unclear whether Rio Tinto would convert this rights into shares in PTFI. He said that this is one of the subjects currently being discussed between the government and PTFI. ?There are technical matters because of Rio Tinto?s presence (in PTFI operations). This is very technical and is currently being discussed with Freeport,? he said.

In line with the existing regulations, PTFI is required to divest up to 51 percent shares to Indonesian investors with priority given to the government or state-owned companies. The government currently already own 9.36 percent of PTFI shares, leaving the company to divest another 41.64 percent shares. The government plans to appoint state-owned PT Indonesia Asahan Aluminium (Inalum) to acquire the shares. Inalum is set to become a holding company of state-controlled mining firms. (*)