A Freeport IPO would benefit capital market: OJK

JAKARTA. PT Freeport Indonesia will benefit local capital market if permitted to conduct its obligatory share divestment through an initial public offering (IPO), a Financial Services Authority (OJK) executive believes.

The commissioner for capital market supervisor at OJK, Nurhaida, said that the IPO would be a good opportunity for Indonesians to own shares of the US-based mining company.

"A company with great value in the capital market would increase its market capitalization significantly," said Nurhaida in Jakarta on Monday.

By conducting an IPO, Nurhaida said, Freeport would be listed on the Indonesia Stock Exchange (IDX), and as a listed company, the giant gold and copper miner would have to adhere to good governance.

"As a public company, the performance of Freeport Indonesia would be being monitored and supervised by the OJK,” she asserted.

She added that the government had not yet decided how to set up the divestment scheme. 

According to Nurhaida, if the divestment is done through an IPO, the government would have to revise Government Regulation (PP) No. 77/2014.

Earlier, Finance Minister Bambang Brodjonegoro claimed to have talked with the Energy and Natural Resources Minister Sudirman Said on this issue.

Under PP No. 77/2014 on mineral and coal-mining business activity, Freeport must divest 10.64 percent of its shares to the government by Oct. 14. After accepting the offer, the government has 90 days to negotiate with Freeport.

Freeport Indonesia, a subsidiary of US-based giant Freeport McMoRan Inc., intends to meet the government’s requirement that it divest 30 percent of its shares to Indonesian parties. The share divestment is part of a deal between the company and the government as they re-negotiate Freeport’s contract of work (CoW) as mandated by the 2009 Mining Law.

Freeport Indonesia is currently 90.64 percent owned by Freeport McMoran and 9.36 percent owned by the Indonesian government. To meet the government’s requirement, the company must offer another 20.64 percent of its shares to Indonesian shareholders. (Ayomi Amindoni)