Indonesia signs deal with state firm for Grasberg mine transfer

JAKARTA: Indonesian regional and central government officials yesterday signed an agreement with state holding company PT Inalum that lays the foundation for the transfer of Freeport-McMoRan’s giant Grasberg copper mine to local control.

Indonesia and Papua have long pushed for greater control over Grasberg and the new ownership structure may ease tensions over spoils from the world’s secondbiggest copper mine.

Indonesia and Freeport agreed in principle in August to set up the United States company’s rights to Grasberg under a new mine licence system from an existing contract of work, and the American miner said it would divest up to 51 per cent of its local unit to “Indonesia interests”.

Under the agreement, Papua Provincial Government and the Mimika Regency will jointly own rights to a 10 per cent share in PT Freeport Indonesia (PTFI) once they have been divested, said the Finance Ministry in a statement.

“This portion of share ownership rights is for the interests for the indigenous land owners and members of the community facing permanent impacts,” said the statement.

“The agreement is a strategic step forward in efforts to acquire shares divested by PTFI,” it said.

Inalum, which holds ownership of all state-owned mining companies, has been nominated to acquire an additional 41.64 per cent in Freeport Indonesia, which would take Indonesia’s share of PTFI to 51 per cent, up from 9.36 per cent now.

A government source said the memorandum of understanding signed yesterday was an initial step in the acquisition process and would allow the transaction involving the Indonesian parties to be carried out through a “single window.” Reuters