January 18, 2016 / 3:12 PM / 2 years ago

UPDATE 2-CEO of Freeport's Indonesian unit steps down, replacement sought

(Adds comment from Freeport head office spokesman, background on stock price)

JAKARTA, Jan 18 (Reuters) - The chief executive of Freeport McMoRan Inc’s Indonesian unit, Maroef Sjamsuddin, has resigned for “personal reasons”, a company spokesman said on Monday, less than a month after the chairman of the U.S. mining giant stepped down.

Freeport, which operates one of the world’s largest copper and gold mines in Indonesia’s far-eastern Papua region, is a key source of resource revenue for the country, and the issue of its operations and contract to operate are politically sensitive.

Sjamsuddin’s resignation, after only a year in the job, follows an inquiry into the Indonesian parliamentary speaker that he spearheaded, which saw the speaker forced to resign amid corruption allegations in December. The matter is still being investigated by the attorney general’s office.

Freeport has started a process to replace Sjamsuddin, Eric Kinneberg, a spokesman at Freeport’s head office in Arizona, said in an email. He did not elaborate on why Sjamsuddin had quit other than to say it was for personal reasons.

Freeport’s stock has fallen 36 percent this month hammered by falling prices for copper and oil, which the company also produces. The New York Stock Exchange, where Freeport’s stock is listed, was closed on Monday for the Martin Luther King holiday.

Sjamsuddin, a retired Air Vice Marshal of the Indonesian Air Force and deputy chief of the National Intelligence Agency (BIN), was picked by former Freeport Chairman James Moffett to head the Indonesian unit in January 2015, despite his apparent lack of experience in mining.

At the time, Sjamsuddin said he would enhance cooperation with the government and other stakeholders to support the company’s long-term plan to operate mines in Papua.

Freeport is negotiating with the government for an extension of its Grasberg contract, which is due to expire in 2021. The company, looking to invest $18 billion to transition Grasberg from open pit to underground mining in 2017, wants to finalize an extension before it signs off on the expansion.

The Indonesian government is looking to increase its ownership of Freeport Indonesia, recently valued by the company at $16.2 billion, to 20 percent from a current 9.36 percent.

According to Said Didu, a special staff to the energy minister, Sjamsuddin had worked well with the government.

“I don’t know exactly how the process will go from here. That will depend on his replacement,” Didu said, noting that he didn’t know who had been appointed to replace Sjamsuddin.

Freeport chairman Moffett stepped down on Dec. 28 after three decades in charge. (Reporting by Agustinus Beo Da Costa and Wilda Asmarini in Jakarta. Additional reporting by Nicole Mordant in Vancouver; Writing by Fergus Jensen; Editing by David Clarke, Mark Potter and Marguerita Choy)

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