Freeport to divest stake in Indonesia operation

JAKARTA: US mining giant Freeport McMoRan said on Tuesday it had agreed to divest a 51 per cent stake in its Indonesian unit, bringing an end to a fierce standoff with the country’s government over mining rights.
The agreement will allow the firm to continue operating its vast copper and gold mine in Indonesia’s Papua province until 2041, but require it to build a smelter and give the government a majority stake in the operation.
“We have agreed to increase Indonesian owners from the current 9.36 per cent that the government owns to 51 per cent over time, in a way that compensates us at fair market value,” Freeport chief executive Richard Adkerson said at a joint press conference in Jakarta.
Despite sitting atop some of the world’s most abundant natural resources, successive governments have failed to take advantage of Indonesia’s vast riches.
Economic nationalists have recently pushed for stricter conditions on foreign firms in a bid to reap greater profits from the industry.
Under new rules announced early this year, Jakarta raised taxes and royalties on mineral shipments and demanded that foreign miners reduce the stakes in their Indonesian operations to less than half.
The government asked firms to sign new permits that critics said offered less protection — triggering a standoff with Freeport, which stopped shipments from its huge Grasberg mine in Indonesia’s east. — Reuters