SOE Minister says Freeport share price is too expensive

State Minister of State Owned Enterprises (SOE) Rini Soemarno said that the US$1.7 billion price offered by gold and cooper giant PT Freeport Indonesia for its 10.64 percent shares that it must divest this year is too expensive.

Bisnis Indonesia quoted Rini as saying Wednesday that state-owned securities firms PT Danareksa Securities and PT Mandiri Securities have reviewed the PT Freeport offer, and concluded the price as too expensive.

She, however, acknowledged it remains unclear what the basis is used by PT Freeport in determining the share price. ?I have no information what the value is based on. Whether it is based on present value, book value asset, or based on its copper and gold reserves,? she explained.

Nevertheless, Rini said that state-owned enterprises remain interested in acquiring the shares, adding that it?s important for state mining firms to be able to have stakes in large mines such as the one operated by PT Freeport in Papua.

The ministry has proposed a number state mining firms including PT Aneka Tambang Tbk, PT Bukit Asam Tbk, and PT Indonesia Asahan Aluminium to team up in acquiring the PT Freeport shares. PT Freeport is obliged to divest the stake to Indonesian investors as part of its mandatory divestment program.

Meanwhile, lawmaker Kurtubi was quoted by Kontan as saying that if the government decides not to extend PT Freeport?s existing contract when its expires in 2021, there?s no use for Indonesia to acquire the shares as the asset would soon bee returned to the country. He added that the $1.7 billion price tag for the 10.64 percent shares as too expensive.

The dilemma, however, is that if the government extends the contract to 2041, Indonesia would lose the opportunity of having ownership in the giant mine. (*)