21 Jan 2016

Jakarta unhappy with Freeport divestment offer

5:58 pm on 21 January 2016

Indonesia's government is unhappy with the price on offer for shares in Freeport Indonesia, which operates a massive mine complex in Papua.

West Papuans have long expressed frustration about the environmental destruction caused by the Freeport mine operations in Mimika regency.

West Papuans have long expressed frustration about the environmental destruction caused by the Freeport mine operations in Mimika regency. Photo: MIneral Policy Institute

Under divestment rules, Freeport is required to sell a 10.64 percent stake of the Grasberg copper and gold complex to the government as part of the company's process to secure an extension to operate in Papua beyond 2021.

Freeport, whose parent company is US-based Freeport-McMoRan, has offered the stake for US$1.7 billion, which state-owned enterprises minister Rini Soemarno says is too expensive.

The Jakarta Globe reports her saying Jakarta is still interested, adding that SOE companies should have big mines and that these mines belong to Indonesia.

This comes amid protracted and difficult negotiations between Jakarta and Freeport, with both the Freeport Indonesia's president director Maroef Sjamsoeddin and the chairman of the board of Freeport-McMoRan, James Moffett, having resigned in the past month.

Setya Novanto has resigned as Indonesia's Speaker of Parliament after being recorded in an alleged extortion attempt related to negotiations over the renewal of miner Freeport McMoran's lucrative contract in Papua province.

Setya Novanto Photo: AFP

The negotiations hit controversy last month when the speaker of Indonesia's parliament Setya Novanto was found to have sought to extort a stake in freeport's operations in return for assisting to secure the contract extension.

Despite the huge revenues generated by the mine complex in their province, Papuans have largely been ignored by the negotiations.

The Papua provincial governor, Lukas Enembe earlier indicated his administration would push to get a ten percent stake in the Indonesian component of Freeport.

Governor Enembe said that Mimika regency has sued Freeport over the traditional ownership of the land because the company hasn't paid anything to the local community for use, and destruction, of its environment.