No Need for IPO to Divest Freeport’s Shares: Senior Minister

The divestment of Freeport’s shares is related to its contractual extension.  The company has also agreed to convert its CoW into a Special Mining License (IUPK), build a smelter within the next five years and increase its contribution to state revenues from its Grasberg mine in Papua.

Economic Coordinating Minister Darmin Nasution has stressed that the government could directly buy 51 percent of gold and copper miner PT Freeport Indonesia, a subsidiary of the United States’ Freeport McMoran, without passing through an initial public offering (IPO).

“In the Contract of Work [CoW], the divestment is implemented not through an IPO,” said Darmin on the sidelines of the Chamber of Commerce and Industry (Kadin) national meeting in Jakarta on Tuesday as reported by kompas.com.

Darmin referred to Article 24, paragraph 2 of Freeport’s CoW. He also said that under the CoW, the transfer of ownership of 51 percent of Freeport’s shares should have been completed in 2011.

The minister questioned the argument of Freeport McMoRan Inc. CEO Richard C. Adkerson, who rejected the divestment scheme offered by the government through his letter to the Finance Ministry’s secretary general, a copy of which was also sent to Finance Minister Sri Mulyani.

In the letter dated on Sept. 28, Adkerson reportedly called on an immediate divestment through an IPO.

Darmin admitted the government had issued a regulation that allowed a divestment mechanism through an IPO, but this had already been revoked.

The government has set a target to complete the divestment process by next year.

The divestment of Freeport’s shares is related to its contractual extension.  The company has also agreed to convert its CoW into a Special Mining License (IUPK), build a smelter within the next five years and increase its contribution to state revenues from its Grasberg mine in Papua. (bbn, The Jakarta Post)