The race for ownership of one the world’s biggest gold producers, PT Freeport Indonesia, is heating up as the government finally gave a formal nod to state firms to take part in the competition.
State-Owned Enterprises Minister Mustafa Abubakar said Friday that state-owned mining companies such as PT Aneka Tambang and PT Tambang Batubara Bukit Asam would be given priority to partner with local administrations in Papua to acquire shares in Freeport.
“We won’t let up the chance when Freeport offers shares,” Mustafa said.
Antam president director Alwinsyah Loebis declined to comment on the minister’s suggestion, while Bukit Asam president director Sukrisno said that he had been informed of the matter.
According to the initial contract with the government in the 1970s, Freeport’s parent company, Freeport-McMoran Copper and Gold Inc., is required to divest its stake in Freeport Indonesia to the government or to local firms. The contract does not specify a set percentage of shares to be divested. However, under a 1991 contract, the US company is required to give up 51 percent by Dec. 30, 2012.
Freeport spokesman Boediman Moerdijat told The Jakarta Post on Friday that the issuance of a 1994 government regulation nullified the divestment obligation and allowed the company to hold full ownership.
Currently Freeport-McMoran holds a 81.28 percent stake in the company,
PT Indocopper Investama and the government both hold a 9.36 percent stake each. Indocopper is entirely owned by Freeport.
“Nevertheless, we are offering our good faith to open discussions with the provincial government for a possible divestment of shares,” Boediman said.
The shares that are up for discussion, he added, was the 9.36 percent held by Indocopper. Freeport Indonesia, he said, had been engaged in talks with the provincial government since late last year.
In 1991, Indocopper, then controlled by the Bakrie family, acquired 9.36 percent of shares in Freeport Indonesia for US$213 million. In the following year, Freeport bought back 51 percent of its shares in Indocopper for $212 million.
In 1997, the Bakrie family sold the remaining 49 percent of Indocopper it still held to PT Nusamba Mineral Industri, a company owned by local businessman Bob Hassan, who later sold shares in Indocopper back to Freeport.
The Bakrie family, which has a strong presence in the mining industry through various firms including the world’s biggest thermal coal producer, PT Bumi Resources, is said to be interested in buying back shares in Freeport Indonesia.
Mustafa said the government would assign an official to represent it at Freeport Indonesia’s board of commissioners in a move to improve communication between the company and the government.
“The commissioner will represent Indonesia on legal issues. We are still in discussions with the Finance Ministry on who to appoint for the post,” he said, adding that the appointee would be from either of the two ministries.
“This move will also reduce the communication gap between the government and Freeport,” Mustafa said.
In 2009, Freeport paid financial obligations amounting to S$1.4 billion. The figure was higher than the amount paid in the same period the previous year, which reached $1.2 billion.
From 1992 to 2009, Freeport Indonesia has paid the government a total of $9.5 billion in financial obligations as set out in the 1991 contract.