Freeport officially must divest 41.64% shares

JAKARTA. Ministry of Energy and Mineral Resources (ESDM) finally released Minister of ESDM regulation No. 9/2017 on the Mechanisms of Shares Divestment and Divestment Price on Mineral and Coal Mining Businesses.

The essential points of this regulation include the divestment requirement for the foreign mining companies, as well as the time frame, price standard, as well as the takeover schemes. On 13 January 2017 KONTAN reported that this regulation would force Freeport to settle the divestment obligation.

Head of Communication, Information Services, and Cooperation Bureau at Ministry of ESDM Sujatmiko said that the government agreed that 41.64% of Freeport shares would be divested in a normal price.

The regulation stipulates that Freeport has to apply for the divestment in 90 days after the issuance of Minister of ESDM Regulation No 9/2017 on 25 January. Subsequently, 30 days after both sides achieving agreement on the share price, the government has to decide whether to take over the shares or to offer the shares to local government, state owned enterprise, local owned enterprise, or national private company. If no one is interested, the shares will be offered the stock exchange. “That are the options,” Sujatmiko said.

In this case, Financial Service Authority (OJK or FSA) will monitor the public offering mechanism. In order to prevent Freeport or its relations to take the divested shares, the regulation stipulates that the mining company, of which the shares are divested, is prohibited to give loans to another company that is willing to buy the shares.

Spokesman of Freeport Indonesia Riza Pratama refused to comment, as Freeport is still reviewing this regulation. “We are discussing the plan for divestment to the government,” he said (25/1).

Meanwhile, President Director of PT Indonesia Asahan Alumunium (Inalum) Winardi Sunoto, who is also the Head of Mining State Owned Enterprises Holding, preferred to wait for the government’s decision. Winardi claimed that the holding is ready to buy the shares if government does not take over the divested shares.

Director of Centre for Indonesian Strategic Studies (Cirrus) Budi Santoso suggests that state owned enterprise should be the operator, if the enterprise takes over the shares.
(Muhammad Farid/Translator)