Freeport Indonesia, the country largest gold miners, is likely to pursue an initial public offering in a move to comply with divestment rules, president director said on Wednesday (23/11). (SP Photo/Joanito de Saojoao)

Freeport Indonesia to Pursue IPO: President Director

BY :PRIMUS DORIMULU

NOVEMBER 24, 2016

Jakarta. Freeport Indonesia, the country largest gold miners, is likely to pursue an initial public offering in a move to comply with divestment rules after receiving support from the government on the plan, the president director said on Wednesday (23/11).

Under a 2014 government regulation, the local unit of US gold mining giant Freeport McMoran must divest 30 percent of its shares to any Indonesian parties by 2019. Today, Freeport McMoran controls 90.64 percent shares in Freeport Indonesia while the government owns the remaining shares.

An IPO has been Freeport Indonesia's preferable method to unload the shares, but the government has insisted the company must first offer the shares to government or state-owned enterprises.

Early this year, Freeport Indonesia offered 10.64 percent to government for $1.7 billion, but the deal failed to materialize with the government deeming the price too expensive.

Chappy Hakim, Freeport Indonesia new president director, said that Energy and Mineral Resources Minister Ignasius Jonan told him in a meeting last week that government had a change of heart.

"As of today, the government has the same stance as the company," Chappy said in a meeting with national media chief editors late on Wednesday.

"We now only need to calculate Freeport valuation. If its attractive, I think an IPO is very likely," he said.

Indonesian Air Force marshal Chappy was appointed as Freeport president director last week, arriving at a crucial time for the company as it tries to secure extensions for mining operations in the country beyond beyond the 2021, when its contract of works end.

The divestment is one of the government demands for starting contract extension negotiation in 2019.

But, it is also proof of one of the trickiest part of the bargain. Chappy predecessor, former deputy to the chief of the State Intelligence Agency Maroef Sjamsoeddin, resigned in January after he unveiled an extortion attempt by top politicians and lawmakers in regard to the company's planned share divestment.

SHARE