JAKARTA — Indonesia’s nationalization of a major copper and gold mine formerly run by U.S. metals company Freeport-McMoRan is a win for Indonesian President Joko Widodo who has been calling for the reclamation of strategic resources. But the lack of agreement over future investments puts one of the world’s biggest sources of the red metal on shaky grounds.
According to the basic agreement reached on Thursday, Freeport and Anglo-Australian peer Rio Tinto will sell their shares in the local joint venture that runs the Grasberg mine to state-owned resources company Indonesia Asahan Aluminum, or Inalum.
Inalum will pay a combined $3.85 billion to the two companies to acquire all of Rio Tinto’s interest and lift its overall stake to 51%. Freeport will hold onto the remaining 49% stake in the operator of the mine in eastern Indonesia’s Papua province. A final deal is expected this year.
President Widodo hailed the agreement as “the product of three and a half years of negotiations.” The leader has been hurrying to solve the Freeport issue, the biggest knot in his policy of reclaiming strategic resources, ahead of elections in April.
Freeport Indonesia discovered the Grasberg copper and gold deposit in Papua in 1988. It is said to be the world’s second-largest copper mine in output terms and the top source of gold.
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