JAKARTA TARGETS FREEPORT DEAL BY FEB
Basic structure may be in place by year-end, says minister
INDONESIA expects to conclude a deal with FreeportMcMoRan Inc by February that will see the United States miner shed its majority ownership of the giant Grasberg copper and gold mine.
The basic structure of the deal may be in place by year-end and signed by February, said State-Owned Enterprises Minister
Rini Soemarno , here, on Tuesday. The government was happy with the progress of negotiations with Freeport and its partner Rio Tinto Group, she said.
Riza Pratama, a spokesman for Freeport’s local unit, said the negotiations were “going well” and constructive. Eric Kinneberg, a spokesman for the Phoenixbased parent company, said it had nothing to add beyond Pratama’s comments.
Freeport shares were down 1.1 per cent at 2.35pm in New York as copper declined for a third day.
Even though Pratama’s language was favourable, “some investors get nervous anytime there is talk of a deal”, said Jeremy Sussman, an analyst with Clarksons Platou Securities Inc.
Rini’s comments signalled an easing of tension between the two sides.
In September, Freeport rebuffed government proposals on the valuation and method of divestment of the miner’s Indonesian unit within a framework agreement reached in August.
Under the deal, state ownership will rise to 51 per cent in exchange for a licence that would allow Freeport to operate the project through 2041.
“Sometimes when we go to a negotiation table, you know everybody’s a bit suspicious of what’s what,” said Rini. “But I think after a few sessions, all of us realise and believe that we want to do a good thing, the best thing for everybody, a win-win for everybody.”
Under Freeport’s pact with Indonesia, Grasberg would see an investment of as much as US$20 billion (RM81.84 billion) through 2031 to further develop the mine, including the construction of a smelter.
In January last year, Freeport valued its Indonesian operations in a government filing, excluding an interest held by Rio, at US$16 billion, according to Freeport chief executive officer Richard Adkerson.
Freeport has maintained that the divestment process was contingent on reaching an agreement on “fair value” for the stake.
Freeport also needs to reach an agreement with Rio Tinto over its income stream asset that’s part of the joint venture agreement.
The minister said she was happy with the progress of those two-way talks.
“We’re discussing with Rio Tinto, we’re discussing with Freeport, and Freeport is also discussing with Rio Tinto,” said Rini.
“So it becomes a three-way conversation, which I think has gone very well.” Bloomberg