JAKARTA (Reuters) - Freeport McMoRan Inc’s Indonesian unit has submitted a divestment price to the Indonesian government for an additional stake in one of the world’s biggest copper mines, an energy ministry official said on Thursday.
Freeport Indonesia must sell the Indonesian government a 10.64 percent stake of the huge Grasberg copper and gold complex in remote Papua as part of the process to extend its right to operate beyond 2021.
The U.S. mining giant valued its Indonesian asset at $16.2 billion, Bambang Gatot, the ministry’s director general of coal and minerals told reporters, adding that the divestment offered to the government was worth $1.7 billion.
“Finance Minister will decide who will take this divestment,” he said, adding that several other ministries would be involved in the decision making process. “We still continue to discuss renegotiation or amendments of contract.”
Gatot has previously said that the government will decide within 60 days whether it will buy the stake or offer it to a state-owned enterprise or regional government.
The Indonesian government is looking to increase its ownership of Freeport Indonesia to 20 percent from a current 9.36 percent. A further 10 percent must be divested to the government by the end of 2019.
Under current rules, many major miners operating in Indonesia can only apply for a contract extension two years before a concession agreement is due to end.
Freeport, which is looking to invest $18 billion to transition the Grasberg complex from open pit to underground mining in late 2017, wants to finalize an extension before it signs off on the expansion.
Freeport has also sought certainty on the concession agreement extension or changes to the contract as part of discussing the larger divestment.
Following a contract amendment or extension, Freeport has “agreed to offer at fair market value” an additional 20.64 percent stake in Grasberg to bring the government ownership to 30 percent, company spokesman Eric Kinneberg told Reuters in an email on Thursday.
“The government requested that PTFI (Freeport Indonesia) submit a valuation of the company to facilitate discussions and FCX (Freeport) has submitted a valuation report to the government in connection with this process,” he added.
Reporting by Wilda Asmarini and Michael Taylor; Editing by Christian Schmollinger