Indonesia to take majority stake in massive gold, copper mine | Daily News

Indonesia to take majority stake in massive gold, copper mine

Indonesia will take a majority stake in one of the world’s biggest gold and copper mines, the government said Thursday (Jul 12), as it moves to claw back control of its natural resources.

State-owned mining firm Inalum is to assume a 51 per cent interest in the Grasberg mine under an agreement to be signed later in the day, President Joko Widodo said.

Indonesia currently holds just under 10 per cent of the mine, which is owned and operated by a unit of US-based Freeport-McMoRan.

Freeport is expected to continue operating the vast complex in the jungles of Papua province - and keep the remaining ownership stake.

Widodo did not reveal financial details of the agreement, which he said came after “very difficult, intense” negotiations.

“This is a leap forward,” he told reporters. “It’s a done deal, we just need to sign it.”

The deal means more tax and royalties revenue for the government, he added.

Ministers were set to hold a news conference about the deal later in the day.

The announcement comes after more than a year of see-saw negotiations over the future of Freeport’s operations in the Southeast Asian nation.

The company and Indonesia’s government have sparred over the ownership of Grasberg and its social and environmental impact, including how the firm manages mine waste known as tailings.

The mine is a frequent flashpoint in Papua’s struggle for independence from Indonesia and has fuelled resentment over how much locals benefit from the region’s rich resources.

Papua, on the western half of New Guinea island, has been the scene of a simmering independence insurgency since it was annexed by Jakarta in the late 1960s.

Anglo-Australian mining giant Rio Tinto has a joint venture agreement with Freeport for about 40 per cent of Grasberg’s production.

Rio Tinto has previously said it would be willing to sell its interest in the complex, with earlier reports pegging a potential deal at around US$3.5 billion.

Foreign firms have been ordered to comply with new mining ownership rules launched by Widodo - who is seeking re-election next year - aimed at exercising more domestic control of Indonesia’s resources.

Despite sitting atop some of the world’s most abundant natural resources, successive governments have failed to take advantage of its vast riches, with critics blaming badly thought-out and nationalistic policies that make the country an uncertain place to invest.

A series of regulatory changes from the government in recent years have caused jitters among miners, with some foreign firms choosing to exit Indonesia rather than deal with such an unpredictable environment.

Channel NewsAsia


 

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