ESDM made IPO option for mining sector
JAKARTA. Bad news for Indonesia. Instead of the government or state-owned enterprises (SOEs) could have the shares of foreign mining companies, which are obliged to divest, the Minister of Energy and Mineral Resources (ESDM) Ignatius Jonan even offered the option of IPO or initial public offering (IPO) to the foreign mining companies.
The idea for IPO appeared during the meeting between Jonan and mining entrepreneurs, Wednesday night (16/11). "There was option for divestment through go public so that the national investors may take advantage of the mechanism," said the spokesman of Ministry of Energy and Mineral Resources Sujatmiko, Thursday (17/11).
IPO may be the last option if the negotiations between government and foreign investors meet the deadlock.
To that end, the Ministry of Energy (ESDM) will set up a legal framework for IPO. Let alone, Government Regulation No. 77/2014 on the Executive Business Activities of Mineral and Coal Mining does not stipulate the divestment. The regulation stipulates that foreign investors are subject to divest mining shares after 5 years of production through gradual offering, starting from central government, SOEs, to local governments.
This option is assumed as a solution for PT Freeport Indonesia to settle its obligation to divest 10.65% of its shares. Let alone, until now the government and Freeport have not yet reached agreement on the shares price of Freeport. Freeport insists that the price for 10.64% of its shares is US$1.7 billion, while the government estimates that the price supposed to be US$630 million.
But Sujatmiki rejected the assumption. Divestment through an IPO is generally applicable. Meanwhile, the spokesman of Freeport Indonesia Riza Pratama said that the company is ready to follow that option if the IPO is considered as a divestment.
President Director of PT Inalum Winardi Sunoto warned that before conducting the IPO, the should be offered in advanced to state owned enterprises (SOEs), local owned entrpises, and privates in orderly. He suggested to form a holding of mining SOEs to control the divestment of mining company like Freeport.
Mining observer Budi Santoso said that public can enjoy the IPO. However, the IPO does not necessarily assure the increase in national ability, as the mining activities are still controlled by the major share holders.
To provide certainty for investors, the government has to make decision. Let alone, the mines are located in Indonesia.
Editor: Barratut Taqiyyah Rafie