Freeport McMoran (FCX) has stated that it still controls Grasberg mine in Papua, even after the company divested 51 percent of its shares in its subsidiary, PT Freeport Indonesia, as required by Indonesian law. Freeport McMoran CEO Richard Adkerson said his company would concentrate in underground mining next year because of the depletion of reserves resulting from its open mining activities.
“FCX will continue to take control over the operation and management of PTFI,” said FCX in its statement last week.
In early the 1980s, the company mined 800,000 to 1 million tons of copper concentrates per day. Currently, it produces 100,000 tons of copper concentrates. The company said the underground mining needed an investment of US$20 billion.
Meanwhile, the Energy and Mineral Resources Ministry’s mineral and coal director general, Gatot Ariyono, confirmed that Freeport would become main operator of the Grasberg mine because Indonesia needed to gradually learn about underground mining.
“It is very technical. We cannot immediately take over,” said Bambang over the weekend as reported by tempo.co.
The divestment agreement with PT Freeport Indonesia was announced by Adkerson during a joint press conference with Finance Minister Sri Mulyani Indrawati and Energy and Mineral Resources Minister Ignasius Jonan on Aug. 29.
The company also agreed to convert its contract of work (CoW) into a special mining permit (IUPK), build a smelter within the next five years and increase its contribution to state revenue from its Grasberg mine in Papua. (bbn)
Gold and copper miner PT Freeport Indonesia (PTFI) has finally agreed to divest 51 percent of its shares and to other terms related to its contractual extension, after a long tug-of-war negotiation with the Indonesian government.
Freeport Indonesia, a subsidiary of US mining giant Freeport McMoRan, also agreed to convert its contract of work (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, announced a government-Freeport joint press conference on Tuesday.
In return, Freeport’s contract, originally set to expire in 2021, will be extended to 2041 under the new terms.
Freeport McMoRan CEO Richard Adkerson said the compromise with the government was essential for the firm because although the open mine reserves were depleting, his company had seen large potential in its underground mine.
PTFI plans to invest US$20 billion over the next two decades, with $17 billion to be invested by 2031, he added.
“To reach our objectives meant that we have to be willing to cooperate and build a smelter and divest 51 percent. We are working cooperatively with the government to achieve the objectives,” Adkerson said during the press conference.
“We have agreed to increase Indonesian ownership from 9.36 percent to 51 percent over time in a way that compensates the fair market value. We still have work to do to reach the compromise,” he said. (bbn)
Source: Fedina S. Sundaryani
29 August 2017