Freeport McMoRan refuses to go along with Jakarta’s takeover plan
Freeport-McMoRan Inc, the US-based mining giant, has come out swinging publicly against plans by the Indonesian government to take over a controlling interest in its Grasberg Mine, the world’s largest gold mine and the second largest copper mine, located on high on the side of a remote mountain in the province of Papua.
The Phoenix, Arizona company owns 90.64 percent of PT Freeport Indonesia, the principal operating subsidiary. The Indonesian government currently owns the remaining 9.36 percent.
In a Sept. 28 letter to the secretary general of Indonesia’s finance ministry, Rick Adkerson, Freeport’s chief executive, said the company, which has operated the mine since 1972, “has worked to be responsive to the government’s aspirations for 51 percent ownership but has been consistently clear that the divestment is conditional upon the transactions reflecting fair value of the business through 2041 and that Freeport retain management and governance control. These are non-negotiable positions.”
“There was a lot of celebrating of the framework agreement (ratifying the divestiture) by Indonesians,” said a western business executive. “But they seem to think still they can get Freeport to sell at a steep discount. This was always going to get very messy. For decades vested interests have been trying to take Freeport. This move seems no different. It is a bellwether case for international investor sentiment.”
Indonesian private interests for decades have coveted the mine, which in 1988 was estimated to have reserves of gold, silver and copper worth US$40 billion. Freeport McMoRan was Indonesia’s first major international investor under then-leader Suharto. President Joko Widodo is said to have been the impetus for the divestiture, asserting that the country has a right to its own mineral resources.
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