Freeport Agrees to 51% Divestment
Press conference of Government and PT Freeport Indonesia Negotiation Team, at Ministry of Energy and Mineral Resources, Jakarta, on Tuesday (29/8)
PT Freeport Indonesia has agreed to divest 51 percent of its shares to the Government of Indonesia. The Company has also agreed to build smelter facilities for five years or no later than October 2022. These agreements were reached in a meeting of the Negotiation Team of the Government and PT Freeport Indonesia, at the Ministry of Energy and Mineral Resources, Jakarta, Sunday (27/8).
On that meeting, the Government of Indonesia was represented by Minister of Energy and Mineral Resources Ignasius Jonan as the Head of the Negotiation Team, Minister of Finance Sri Mulyani Indrawati, officials from Ministry of Energy and Mineral Resouces and Ministry of Finance, representatives from related ministries, such as Coordinating Ministry for the Economy, Coordinating Ministry for Maritime Affairs, Ministry of Law and Human Rights, Ministry of Environment and Forestry, Ministry of State-Owned Enterprises, State Secretariat, and Investment Coordinating Board (BKPM). In the meantime, PT Freeport Indonesia was represented by the President and CEO of Freeport Mc Moran Richard Adkerson as well as Board of Directors of PT Freeport Indonesia.
Minister Ignasius Jonan, in a press conference in Jakarta, on Tuesday (29/8), explained that there are 4 (four) final agreements reached in the meeting. First, the meeting has formulated a legal basis regulating that the relations between the Government and PT Freeport Indonesia shall be in form of Special Mining Permit (IUPK), not Contract of Work (Kontrak Karya).
Second, PT Freeport Indonesia shall divest 51 percent of its shares to Indonesian Government. Technical matters relating with the stages of divestment and the implementation time are going to be discussed by Team from the Government as well as PT Freeport Indonesia, Jonan said. Third, PT Freeport Indonesia will build smelter facilities for five years or no later than October 2022, unless a force majeure condition takes place.
Fourth, the States aggregate revenue will be bigger than the revenue through Contract of Work, supported by fiscal and legal security that will be documented for PT Freeport Indonesia.
After PT Freeport Indonesia agrees with these four points, the Minister added, as regulated in IUPK, the Company will get prolongation of operation time 2 x 10 years in maximum until 2041. The Government as well as PT Freeport Indonesia are going to cooperate to immediately complete the documentation of structure that has been agreed upon, and PT Freeport Indonesia will get the required corporate approval, Jonan firmly said.
In accordance with the Presidents Instruction
Minister Ignasius Jonan said that the results of the negotiation between Indonesian Government and PT Freeport Indonesia are in accordance with the instruction of President Joko Jokowi Widodo to prioritize national interest, Papuan people interest, and the states sovereignty in managing natural resources as well as maintaining a conducive investment climate. President Joko Widodo ordered us to execute these agreements and to give him a report, Jonan said.
As the Head of the Negotiation Team, Jonan thanked all members of the Negotiation Team from various Ministries/Institutions who have worked hard for months so these agreements can be reached. During one week ahead, the Team will continue its work to formulate technical and detailed matters so the agreements can be implemented immediately according to the prevailing laws and regulations. Minister Jonan also expressed his appreciation to Commission VII of the House of Representatives that have supported this good solution. (EN/Humas Kementerian ESDM/ES)(MMB/YM/Naster)
