Indonesia closes US$3.85 billion Freeport deal, giving it majority stake in huge copper mine
- Agreement is seen as a political boon for President Joko Widodo as he seeks re-election
Indonesia’s state-owned miner PT Inalum on Friday took control of the local unit of Freeport-McMoRan Inc, operator of the world’s second-biggest copper mine Grasberg, with the closure of a US$3.85 billion deal.
The landmark deal, which hands Inalum a 51.23 per cent stake in PT Freeport Indonesia, ends years of tough and often fractious negotiations over ownership rights to Grasberg as Jakarta pushed for greater control over its mineral wealth.
“Today is a historical moment since Freeport began operating in Indonesia in 1973,” a smiling President Joko Widodo told reporters at a press conference. “Everything has been completed, and now all that’s left is the work,” he added.
For Widodo, seeking re-election next year, securing the majority stake in the mine for Indonesia is a political boon, and he had urged both sides to wrap up the deal quickly. The mine is located in the jungles of Indonesia’s Papua province.
Indonesia and Freeport agreed in principle in August 2017 to set up Freeport’s rights to Grasberg according to a new mining licence but the process was held up by numerous issues, including resolution of environmental problems linked to the mine.
“Today we have completed the lengthy process to transfer Freeport’s contract of work to a special mining permit,” Coal and Minerals Director General Bambang Gatot Aryono told reporters at separate press conference.