The divestment, according to a head of agreement signed by Freeport Indonesia and state-owned Inalum, will make the government a majority 51 percent control of of the company.
Freeport Indonesia, a subsidiary of McMoRan Copper & Gold has big copper and gold mine in Grasberg in Papua.
"The share divestment is the only option most rational, most applicable , most affordable," Fahmy said in discussion at the office of the Communications and Information Minister here on Monday.
Other options include nationalization, which is impossible given the risk of economic sanction and pressure from the United States, he said.
Under the Heads of Agreement (HoA) signed on July 12 , the government of Indonesia, represented by Inalum, the holding company for state mining companies, will buy Freeport share at a price of US$3.85 billion.
The payments breakdown into US$3.5 billion in Rio Tinto participation and US$350 million share of Indocopper in Freeport.
The payment for share divestment valued at US$3.85 billion is cheaper than takeover of Freeport in 2021, he said.
Based on the Working Contract , if the government and Freeport agreed to terminate the contract in 2021, the Grasberg mine would be returned to Indonesia but the government has to pay for all the assets anbd equipment estimated to reach a value of US$6 billion.
Indonesian control of 51 percent of Freeport would give a number of economic benefits such as an increase in dividend, larger royalty and tax revenues, he said.
Based on its audited financial report in 2017, PT Freeport Indonesia had an earning after tax (EAT) of US$4.44 billion; up from US$3.29 billion in 2016. With such big EAT, the payback period for the divestment payment of US$3.85 billion is estimated to take only 3 years.
The gold deposits estimated to be worth US$42 billion, the copper reserve worth US$116 billion and silver reserve valued at US$2.5 billion , bring the total proven reserves to US$160 billion in value or around Rp2,290 trillion . The reserves are estimated to last until 2060.
"The government has been committed to giving part of the 51 percent stake to the people of Papua . With the benefits , I come to a conclusion the divestment method is more beneficial," Fahmy said .
(AS/A014)
(T.SYS/B/H-ASG/A014)
Reporter: antara
Editor: Heru Purwanto
Copyright © ANTARA 2018
