Freeport submits draft share divestment agreement to government

President Director of PT Freeport Indonesia (PTFI) Tony Wenas has stated that the company has submitted a draft share divestment agreement for a 12 percent stake to the government as part of the extension of its Special Mining Business Permit (IUPK).

“We have submitted the draft to the government,” Tony told ANTARA after a memorandum of understanding signing event in Jakarta on Wednesday evening (17/6).

Tony explained that the share transfer agreement must be signed before the issuance of the IUPK extension, which will take effect in 2041. The transfer of a 12 percent stake in PTFI from Freeport-McMoRan Inc. (FCX) to the government is stipulated in the Memorandum of Understanding (MoU) regarding the extension of the Special Mining Business Permit at Grasberg, Central Papua. Thus, the draft divestment agreement for the 12 percent stake is a follow-up to the MoU for PTFI’s IUPK extension in Grasberg.

“One of the conditions for issuing the IUPK is the signing of the transfer of shares before 2041. Currently, it has not been signed and is still in process,” Tony said.

The MoU on the extension of PTFI’s IUPK was signed by Minister of Investment and Downstreaming/Head of BKPM Rosan Perkasa Roeslani, President & CEO of Freeport-McMoRan Kathleen Quirk, and President Director of PT Freeport Indonesia Tony Wenas at the U.S. Chamber of Commerce building in Washington D.C., United States, on Wednesday (18/2).

Through the MoU, the government, FCX, and PTFI agreed on six points. Firstly, Freeport’s IUPK will be amended to provide an extension of operating rights for the life of the reserves. Secondly, PTFI will increase its support for communities in Papua, including funding for the construction of a new hospital and two medical education facilities.

Thirdly, PTFI will increase exploration spending and accelerate studies to identify and develop long-term resources and expansion opportunities. Fourthly, PTFI will continue to prioritise domestic downstream processing through the domestic sale of processed copper, precious metals, sulphuric acid, and other products. Additionally, PTFI will have the flexibility to expand marketing of processed copper to the United States based on market mechanisms should the U.S. require additional copper supply.

Fifthly, in 2041, FCX will transfer a 10% stake in PTFI to the government at no cost, with the provision that the recipient reimburses FCX for proportional costs incurred based on the book value of investments benefiting the period after 2041. FCX will retain a 48.76% stake in PTFI until 2041, and its ownership will become approximately 37% starting in 2042.

The sixth point is that the current governance and operational structure, as well as provisions in the shareholder agreement, IUPK, and other existing agreements, will be maintained for the life of the resources.

“Hopefully we can obtain the IUPK extension, so that our operations and the benefits we provide to Mimika Regency, Central Papua Province, and other regencies in Central Papua, as well as to Indonesia, can continue until the end of the mine’s life,” Tony said.