State-owned mining holding company Indonesia Asahan Aluminium, or Inalum, said it expects to finalize a $3.85 billion deal this week to take majority control of the local subsidiary of United States-based mining giant Freeport McMoRan, once environmental and other issues are resolved.
The long-anticipated deal will close “hopefully this week,” Inalum chief executive Budi Gunadi Sadikin told Reuters in an interview on Tuesday, adding that a conclusion within that timeframe was “highly likely.”
The deal, which would give Inalum a 51.23 percent stake in Freeport Indonesia, aims to end years of wrangling over ownership rights to Grasberg, the world’s second-biggest copper mine.
At the same time, Inalum, which last month raised more than $4 billion in bonds to fund the deal, aims to prove to investors it is a “world-class partner that can work with them and get a decent and sustainable business out of Indonesia’s natural resources,” Budi said.
As part of the transaction, Inalum has proposed to sell a 10 percent stake in Freeport Indonesia to Papua Province and Mimika district, where the giant Grasberg mine is situated, for $819 million, he said.
But before Freeport can be issued a new mine permit the government of Papua still needs to agree on the stake price and ratify an expansion of Grasberg’s forestry use permit for the mine’s vast tailings sedimentation area, he said.
The proposed shareholding structure that was rejected by Papua Governor Lukas Enembe last month had now been settled and would benefit Papuans by ensuring the stake could not be sold off by future governments, Budi said.
“There are several examples where a big significant asset is being transferred from foreign investors to local entities and the local government got nothing,” he said.
Inalum was also facilitating discussions between Freeport and the province, which hopes to resolve an existing dispute with the miner over surface water taxes before approving the deal, he added.
Inalum currently has a 9.36 percent stake in Freeport Indonesia.
A Jakarta-based spokesman for Freeport Indonesia and a spokesman for the Papua provincial government did not immediately respond to requests for comment.
