Jakarta, 8/6 (Jubi) – Freeport has agreed to renegotiate six point of Contract of Work, including divesting 30% of its shares, a Freeport official said.
A meeting between the government, the director of Freeport Indonesia Rozik B Soetijipto and the CEO of Freeport McMoran Copper & Gold Inc Richard Adkerson on 3 June resulted in the agreement to divest 30% of the company’s shares.
The deal was surprising since earlier the company had only been willing to sell 20 percent of its shares.
A spokeswoman for Freeport Indonesia, Daisy Primayanti, confirmed the meeting.
“Divestment is part of the strategic points discussed in the contract renegotiation with the government,” Daisy told to tabloidjubi.com by phone on Saturday (7/6).
She further said discussions between both parties went very well and achieved a lot of progress.
But she declined explain further about the mechanism of divestment whether the Provincial Government of Papua would be part of the shareholders. “I apologize for I cannot explain the mechanism in detail. But it will be announced once it’s fixed,” she said.
The Director of Mineral and Mining Resources Ministry, Sukhyar said after the meeting that Freeport should divest it shares after signing of the new contract, or after year 2021.
“This is referred to the contract revision. First phase is to divest 20% shares in the first year,” he said.
He further added after taken several phases, Freeport must fulfill its obligation to release 30% of it shares. According to him, the divestment mechanism would be conducted in several stages. At first, it should be offer in respectfully to the Central Government, Provincial Government, and State’s Company to Regional Company. Meanwhile the reference of shares’ selling price will be count based on the replacement cost or fair value cost to replace the investment made by PT Freeport.
Meeting to renegotiate the Contract of Work between the Government of Indonesia and Freeport Indonesia resulted the following points:
1. The mining areas will reduce from 212,950 hectares to 125,000 hectares.
2. Freeport with Newmont agreed to build a smelter.
3. Freeport agreed to divest 30% of it shares.
4. The Contract of Work will be extended until 2041.
5. The fulfillment of local contains remains at 100%.
6. 1 % royalty will increase to 3,75%.