Indonesia to Finish Negotiations With Freeport by June

Indonesia sets framework for Freeport to yield control of Grasberg mine

Indonesia sets framework for Freeport to yield control of Grasberg mine

Grasberg is the world's second-biggest copper mine and is located in the eastern Indonesian province of Papua.

Indonesia and Freeport have been in tough negotiations since past year after the government issued a new policy that requires miners to divest a 51 percent stake, relinquish arbitration rights and pay new taxes and royalties.

Inalum said Friday it was grabbing a 41.64% stake in the local unit of Freeport, which increases its current ownership in it to 51%.

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

A Freeport Indonesia spokesman, Napoleon Sawai, said last month that Jakarta values the stake at $4 billion, while the USA company values it between $12 billion and $13 billion.

The 10 per cent to be held by Papua and Mimika will be part of this Inalum holding, Inalum chief executive Budi Gunadi Sadikin said.

The agreement allows the Indonesian parties to act as a consortium in the acquisition, funding for which will be provided by Inalum and will not be taken from the central or regional government budgets, Ms Indrawati said.

"The agreement signed today is a strategic step forward in efforts to acquire shares divested by PTFI", it said.

Coal and Minerals Director General Bambang Gatot said on Thursday the government is targeting to complete contract discussions with Freeport by June, noting that divestment issues had not been resolved yet.

"The process to obtain 51 per cent including the Rio Tinto participating interest that will be converted to a shareholding is still being discussed and negotiated with related parties,"Ms Indrawati said".

Under that venture, Rio has a 40 percent interest in PTFI's Grasberg contract, which entitles them to a 40 percent share of all production after 2022.

A Melbourne-based spokesman for Rio declined to comment.

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