It's official: Inalum in control of Freeport
6:32 PM
Add Comment
The government, through PT Indonesia Asahan Aluminium (Inalum), Escially taken control of PT Freeport Indonesia (PTFI), which operates Grasberg
in Papua, the world’s second-largest copper mine, after closing a US$ 3.85 billion deal on Friday.
The World’s Largest Gold Mine
The deal, which ended years of tough negotiations with United States mining giant Freeport Mc-MoRan (FCX), sees the governments shares in PTFI increase from 9.36 to 51.23 percent.
The agreement also marks a crucial change in the operational framework with the special mining permit (IUPK) replacing thecontract of work. Under the new framework, the government has more authority than before.
President Joko Widodo
Following the deal, President Joko Widodo said the Goverment majority ownership in PTFI would be utulized fully for the benefit of the Indonesian people.
"Majority ownership [in PTFI] will be utilized fully for the benefit of our people. Our income, from tax and non-tax [revenue] as well as royalties will he bigger and better,” he said on Friday.
Richard Adkerson
Separately FCX chief executive oificer Richard Adkerson said the IUPK permit issuance was crucial “to give certainty on operational rights until 2041"
“We now have a partner in Inalum that is going to be of great benefit to mining operations, because now it’s going to really be a joint undertaking by the government and Freeport,” he said in Jakarta.
The special mining permit was granted until 2031 with a possibility of a 10 year extension. Meanwhile, the 51.23 percent government stake in PTFI will be represented by Inalum and PT Indonesia Papua Metal & Mineral (IPMM), a joint venture by Inalum and the Papua administration through a region-owned enterprise (BUMD).
According to the data from Inalum, the final structure of PTFI’s shares after the divestment deal will comprise lnalum, IPMM and FCX with ownership of 26.23, 25 and 48.76 percent respectively.
In the structure, IPMM’s shares will be owned by Inalum and Papua’s BUMD with shares at 60 and 40 percent respectively Papua’s 40 percent share of IPMM is considered to be equivalent to 10 percent of shares in PTFI.
Inalum president director Budi Gunadi Sadikin said Indonesia would learn a lot from PTFI’s operations in mining, which had started to work on underground mines.
“What [PTFI] built in Grasberg is the most complex site in the world. And I think one day Indonesian engineers can operate it, but for nowwe need to learn from FCX,” he said.
There are four Indonesians sitting on the new board of commissioners of PTFI, including Amien Sunaryadi, the former chairman of the Upstream Oil and Gas Regulatory Task Force (SKKMigas) and Lt. Gen. (ret) Hinsa Siburian, who once served as the chief of Military Command XVII/Cendrawasih in Papua.
Adkerson of FCX sits as President commissioner of PTFI. Meanwhile, the president director of PTFI is Tony Wenas, who previously acted as the executive director or me same nrm.
The deputy president director is former inelum Chief Financial Officer Orias Petrus Moedak. On Thursday, a group of mining experts jointly signed an open letter in opposition to the divestment scheme, claiming the $3.85 billion deal was far too expensive and that the government had thought little ofthe environmental impact.
The group cited that PTFI’s reserves in the Papua mines was already short and that the contract of work was set to expire in 2021. Based on Inalum’s presentation, the valuation of $3.85 billion was the lowest price compared to previously proposed numbers of 812.15 billion and $ 4.67 billion from FCX and US-based investment bank Morgan Stanley.
Marwan Batubara, one of the mining experts who signed the letter, said the group was dissatisfied with Wednesday’s decision by the Supreme Audit Agency on PTFI’s environmental issues.
“To only oblige PTFI to pay Rp 460 billion in non-tax revenue for the companys misuse of 4,535.93 hectares of protected forest areas is an affront to our country’s sovereignty” Marwan, who is the executive director of Indonesian Resources Studies said.
"Therefore, we called for the cancellation of the divestment deal and for the agreements with FCX to be renegotiated to improve Indonesia’s position,”
The letter was -addressed to Jokowi and shared with the public through social media. The group also called for the House of Representatives and the Corruption Eradication Commission to oversee the deal.
Natural resources law expert at Tarumanagara University Ahmad Redi, one ofthe letter’s signatories, told The Jakarta Post on Friday that the group planned to sue the government over its decision to issue the definitive IUPK to PTFI.
Jakarta Post, Page-13, Saturday, Dec 22, 2018
0 Response to "It's official: Inalum in control of Freeport"
Post a Comment