"I plan to hold final negotiations with Freeport in early October," Lahadalia said at the office of the ESDM Ministry in Jakarta on Friday.
The divestment, which is in accordance with Government Regulation (PP) Number 25 of 2024, is one of Freeport’s requirements for extending its Special Mining Business Permit (IUPK) for Production Operation, which is scheduled to expire in 2041.
The regulation states that an IUPK for Production Operation can be extended after meeting several criteria, one of which is entering into a non-dilutive share sale and purchase agreement of at least 10 percent of the total share ownership of the state-owned enterprise.
Lahadalia stated that the government is negotiating with Freeport McMoran, the parent company of Freeport Indonesia, to secure a stake of over 10 percent for Indonesia, and Indonesia itself is targeting a 12 percent stake.
The divestment results will also be distributed to the Papuan regional-owned enterprise (BUMD), effective 2041.
According to him, certainty regarding the divestment is crucial to expedite the process so Freeport can conduct exploration, adding that Freeport's production in 2020-2021 is the result of exploration activities that have been underway since 2004.
He emphasized that exploration for underground mining differs from exploration for open-pit mining, which typically takes 10-16 years.
"If we don't extend it (the permit) immediately, Freeport's peak production will decline once it reaches 2035," Lahadalia said, adding that Freeport's declining productivity will impact state revenue, employment, and the regional economy.
The Indonesian government plans to extend Freeport Indonesia's mining permit contract for 20 years until 2061, beyond the current contract, which runs until 2041.
Lahadalia has reported to President Prabowo Subianto the opportunity to increase Indonesia's share ownership in PT Freeport Indonesia beyond the initial 10 percent plan.
The Minister added that Prabowo has asked him to expedite communication with Freeport management to finalize the agreement.
He also confirmed that the valuation of the additional shares offered is relatively low, as the book value of Freeport's assets is already considered very thin.
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Translator: Putu Indah Savitri, Cindy Frishanti Octavia
Editor: Azis Kurmala
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