Mining operations at Freeport-McMoRan's giant Grasberg open pit site in the Indonesian province of Papua have stopped as a result of a labour dispute, company and union officials said on Monday (10/03). (Antara Photo/M. Agung Rajasa)

Only Local Investors to Get a Slice of Freeport Indonesia IPO, Bourse Chief Says

OCTOBER 27, 2015

Jakarta. The Indonesian stock exchange authority says it will restrict the market for a highly anticipated initial public offering of shares in mining giant Freeport Indonesia to local investors only.

US-based Freeport-McMoRan plans to divest an initial 10.6 percent stake in its Indonesian unit as part of a deal to allow it to extend its contract to operate the Grasberg copper and gold mine in Papua province beyond 2021.

The company, which controls a 90.64 percent stake in Freeport Indonesia, is expected to submit details about the planned divestment to the Indonesian government this month.

Indonesia Stock Exchange (IDX) director Tito Sulistio said on Tuesday that his office, along with the Financial Services Authority, was drafting a regulation prohibiting foreign investors from snapping up the Freeport Indonesia shares, in a bid to accommodate domestic investors.

“Foreign investors will be able to buy, but only after a couple of years,” he added.

Tito said he believed the plan would receive a positive response from the market and major domestic institutional investors like workers’ pension fund BPJS Ketenagakerjaan and civil servants’ pension fund Taspen, both state-owned.

Samsul Hidayat, Freeport Indonesia’s director for corporate evaluation, said he had met officials from the Energy and Mineral Resources Ministry to discuss the planned divestment, prescribed in a 2014 regulation.

The government owns a 9.36 percent stake in Freeport Indonesia; under the regulation, Freeport-McMoRan needs to divest a total of 20.64 to bring its own stake down to 70 percent.

No details have been given for the time frame for the divestment or the projected value of the shares.