(Bloomberg) — The dispute engulfing the world’s second-biggest copper mine deepened as Indonesia’s government said it planned to take a majority stake in the local unit of owner Freeport-McMoRan Inc. within two years while workers at the pit threatened to go on strike.
The state enterprises ministry has cleared a government-run company to buy a majority stake in PT Freeport Indonesia, the local unit that runs the massive Grasberg mine in Papua province, according to Fajar Harry Sampurno, the deputy minister for mining, media and strategic industries. Freeport-McMoran would have to divest its share to a state-owned entity under a new contract that the Phoenix-based miner is yet to sign.
“We’re ready,” Sampurno said at a press conference in Jakarta on Wednesday. A local aluminum producer, PT Indonesia Asahan Aluminium, will be turned into a holding company to purchase the stake, he said. “Once the holding company is formed, they will immediately work on it.”
The preparations for state-ownership suggest Jakarta is refusing to budge in a dispute that’s curtailed mining at Grasberg and prompted Freeport to lay off thousands of workers.
Under new rules announced in January, the government said companies that want to export semi-processed metals including copper concentrate must convert their contract of work to a special mining license, build smelters and add local investors. Freeport has refused to do so until it gets guarantees protecting its investment.
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