Indonesia’s minister of investment Bahlil Lahadalia said on Wednesday that copper mining company Freeport Indonesia must agree to sell an additional 10% stake to the government, Reuters reports.
The announcement comes as the company, which is a subsidiary of US-based Freeport-McMoRan, begins negotiations with the Indonesian government to extend its permit to operate in the country.
Lahadalia said that the government will seek the cheapest prices possible to increase its stake in Freeport’s Indonesian unit from 51% to 61%. Freeport Indonesia controls one of the world’s largest copper mines.
“We ask for Freeport’s 10% divestment through a state company for as cheap as possible. I’m not asking to see the valuation,” he said in an interview via Reuters, adding that Freeport must agree to this requirement to be able to extend its mining permit, which is currently set to expire in 2041.
“If we are not thinking about this now, in 2041 there will be job losses and Papua’s economy will be impacted,” Lahadalia said. Freeport’s flagship Grasberg mine lays in the Papua province in Indonesia. He added that Freeport will also need to build a smelter in Papua in addition to a $3bn project in development in East Java.
Entering into partnerships with Papuan businesses and meeting environmental standards for new projects will also be included in negotiations for the permit extension, Lahadalia said.
Indonesia’s government invested $3.85bn into Freeport in 2018 via a state company. This has proven beneficial for the country, and the government expects to break even on its investment by next year, Lahadalia added.
Details of the negotiations are still being discussed. However, the government has said it is crucial for both parties to finalise the terms of Freeport’s permit extension as early as possible to avoid a dip in output in the future. In this year’s first quarter, Freeport’s profits plunged 57% compared with the same period last year, owing largely to reduced output amid a tight labour market, a spokesperson for the company said at the time.
Last year, the company reported production of 3 million tonnes of copper concentrate. The mining company has recently transitioned into underground mining at Grasberg.