Freeport Indonesia`s divestment process begins

Freeport Indonesia`s divestment process begins

Minister of Natural Resources Ignatius Jonan (left), Finance Minister Sri Mulyani (second left), Minister of State-Owned Enterprises Rini Soemarno (second right) and Minister of Environment and Forestry Siti Nurbaya (right) witnessed the signing of the preliminary memorandum of agreement by the President Director PT Indonesia Asahan Aluminum Budi Gunadi (third right) and Freeport McMoran President Director Richard Adkerson (second left) on the terms of the PT Freeport Indonesia divestment agreement at the Ministry of Finance office, Jakarta, Thursday (12/7/2018). (ANTARA PHOTO/Wahyu Putro A)

Jakarta (ANTARA News) - Freeport-McMoran Inc. (FCX) and PT Indonesia Asahan Aluminium (Inalum) signed the Head of Agreement (HoA) for the divestment process in PT Freeport Indonesia (PTFI) here on Thursday.

"It is hoped that the partnership between Freeport McMoran with Inalum and both central and regional administrations will be able to increase the certainty of the operational atmosphere, its quality, as well as the added value of extractive industries in the future," Indonesia`s Finance Minister Sri Mulyani stated after the signing of the HoA at the finance ministry building.

Inalum, FCX, and Rio Tinto signed the HoA for the sale of FCX shares and Rio Tinto`s participation in PTFI to Inalum.

Inalum`s share ownership at PTFI after the buying of shares would be 51 percent, up from only 9.36 percent earlier.

"Hence, it will help increase the welfare of the people in Indonesia and Papua," Sri Mulyani noted.

The HoA is in line with the agreement made on Jan 12, 2018, between the Indonesian government, the provincial government of Papua, and the district government of Mimika, under which the regional governments would be given 10 percent of the share ownership of PTFI.

Under the agreement, PT Inalum would spend $3.85 billion to buy the participating right of Rio Tinto in PTFI and 100 percent of FCX shares in PT Indocopper Investama, which has 9.36 percent of shares of PTFI.

All parties will finish the purchase agreement before the end of this year.

Based on its audited 2017 financial report, PTFI booked an income of $4.44 billion, up from $3.29 billion in 2016.

PTFI also recorded a net profit of $1.28 billion in 2017, up from $579 million.

PTFI has 38.8 billion pound proven and estimated reserves of copper, 33.9 million troy ounce of gold, and 153.1 million troy ounce of silver.

In 2017, PT Inalum booked an income of $3.5 billion, with a net profit of $508 million.

The company owns resources and nickel reserve at 739 million tons, bauxite at 613 million tons, tin at 1.1 million tons, coal at 11.5 billion tons, gold at 1.6 million troy ounce, and silver at 16.2 million troy ounce.

Reported by Calvin Basuki