The Price Is Wrong? US Mining Giant in Divestment Talks With Indonesia – by Rui Hao Puah (The Diplomat – January 23, 2016)

Freeport McMoRan Inc enters another stage of its contract renegotiation with Jakarta.

Last week, U.S. mining giant Freeport McMoRan Inc’s Indonesian unit submitted a divestment price to the Indonesian government for an additional stake in one of the world’s biggest copper mines, part of a process to allow the firm to extend its right to operate in the country beyond 2021.

According to Energy and Mineral Resources Ministry’s minerals and coal director general, Bambang Gatot Ariyono, Freeport had valued its Indonesian asset at $16.2 billion, with the divestment offered to the government being valued at $1.7 billion for a 10.46 percent stake.

Some Indonesian officials and lawmakers have already described the $1.7 billion price tag for Freeport’s huge Grasberg copper and gold mine in Papua as too high.

“What is definite is that $1.7 (billion) is too expensive,” Indonesia’s state-owned enterprises minister Rini Soemarno told reporters.

Meanwhile, Indonesian House of Representatives Commission member Ramson Siagian has also described the divestment price as too high for its market value.

Heeding calls by parliamentarians for the government to estimate the fair price, Gatot told a parliamentary committee that a team of officials from different ministries will be formed to evaluate Freeport’s offer.

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