JAKARTA EYES CON­TROL OF FREEPORT UNIT

Alu­minium pro­ducer will be turned into hold­ing com­pany to ac­quire ma­jor­ity stake

New Straits Times - - Business -

THE dis­pute en­gulf­ing the world’s sec­ond­biggest cop­per mine deep­ened as In­done­sia’s gov­ern­ment said it planned to take a ma­jor­ity stake in the lo­cal unit of owner Freeport-McMoRan Inc within two years while work­ers at the pit threat­ened to go on strike.

The state en­ter­prises min­istry had cleared a gov­ern­ment-run com­pany to buy a ma­jor­ity stake in PT Freeport In­done­sia, the lo­cal unit that runs the mas­sive Gras­berg mine in Pa­pua prov­ince, ac­cord­ing to Fa­jar Harry Sam­purno, the deputy min­is­ter for min­ing, me­dia and strate­gic in­dus­tries.

Freeport-McMoran would have to di­vest its share to a sta­te­owned en­tity un­der a new con­tract that the Phoenix-based miner had yet to sign.

“We’re ready,” said Fa­jar Harry at a press con­fer­ence, here, on Wednesday.

Alu­minium pro­ducer PT In­done­sia Asa­han Alu­minium would be turned into a hold­ing com­pany to buy the stake, he said.

The prepa­ra­tions for sta­te­own­er­ship sug­gest Jakarta is re­fus­ing to budge in a dis­pute that’s cur­tailed min­ing at Gras­berg and prompted Freeport to lay off thou­sands of work­ers.

Un­der new rules an­nounced in Jan­uary, the gov­ern­ment said com­pa­nies that want to ex­port semi-pro­cessed me­tals, in­clud­ing cop­per con­cen­trate, must con­vert their con­tract of work to a spe­cial min­ing li­cence, build smelters and add lo­cal in­vestors.

Freeport has re­fused to do so un­til it gets guar­an­tees pro­tect­ing its investment.

The rules stip­u­late for­eign min­ers must be­gin sell­ing shares to lo­cal en­ti­ties five years af­ter start­ing pro­duc­tion and must reach 51 per cent lo­cal own­er­ship by the 10th year.

The firm has been min­ing in the coun­try for more than a decade. Bloomberg

BLOOMBERG PIC

In­done­sia plans to take a ma­jor­ity stake in the lo­cal unit of Freeport-McMoRan Inc, which runs the Gras­berg mine in Pa­pua prov­ince, within two years.

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