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Indonesia Officially Owns Majority Stake in Papua Copper Mine

Arie Firdaus
Jakarta
2018-12-21
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Indonesian Finance Minister Sri Mulyani (left), looks on as Freeport-McMoRan CEO Richard Adkerson takes part in a signing ceremony in Jakarta, July 12, 2018.
Indonesian Finance Minister Sri Mulyani (left), looks on as Freeport-McMoRan CEO Richard Adkerson takes part in a signing ceremony in Jakarta, July 12, 2018.
AFP

Indonesia on Friday completed the process to acquire a majority stake in the world’s second largest copper mine, located in easternmost Papua province and operated by U.S.-based mining giant Freeport-McMoRan, President Joko “Jokowi” Widodo announced.

The deal means that the government, through its holding company PT Indonesia Asahan Alumunium (Inalum), now has a 51 percent stake in the gold and copper mine operated by PT Freeport Indonesia since 1973. The government, which signed a tentative deal with Freeport in July, spent U.S. $3.85 billion to increase its stake in the mine from less than 10 percent.

“Today is a historic moment,” Jokowi said at the Presidential Palace in Jakarta. “We will use the majority ownership for the prosperity of the people as much as possible.”

Freeport-McMoRan CEO Richard Adkerson, who was present for the announcement, expressed relief that the deal was completed.

“I thank you for supporting this solution. We strive to fulfill President Jokowi’s wishes and as a result we are given the authority to operate until 2041 with a stable fiscal policy,” Adkerson said.

“The next step is the transition from an open pit that we have operated since 1990, transforming into the largest underground mine in the world.”

In August 2017, the company said it was giving up majority ownership in exchange for being allowed to operate the Indonesian mining complex until 2041.

Papua benefits

As part of the deal, the government awarded Papua province and Mimika regency, where the Grasberg mine is located, a 10 percent stake in the project.

The stake was a first step for the Papua government to offer financial aid and educational opportunities to its residents to meet Jokowi’s goal of bringing prosperity to the region, Inalum President-Director Budi Gunadi Sadikin said.

“This is just a start. It will be repeated in all other contracts which will involve local communities,” Budi told local media.

“Freeport McMoRan is the best operator of underground mining. This is our chance to learn as much as possible so that in the future Indonesians can become the best operators,” he said.

Freeport Indonesia operates six mines in Papua, the largest of which is Grasberg, according to the company’s 2017 financial report. The company’s revenues totaled $4.44 billion, up from $3.29 billion in 2016.

Jokowi has visited Papua, one of the poorest regions in Indonesia where literacy rates are low, at least eight times since taking office in 2014. The president’s nationalistic stance is popular in the province amid calls for the country to have more control of its vast resources.

Calls for military to leave

The president’s announcement came just hours after Papuan leaders on Thursday night called on the government to withdraw troops from Nduga regency, where separatist rebels were blamed for killing at least 19 construction workers earlier this month. The leaders said residents were traumatized by the presence of soldiers.

“We ask President Jokowi to immediately withdraw the troops from Nduga,” Papua Gov. Lukas Enembe said.

Enembe said he and other leaders want the troops out so the people in the majority Christian province can celebrate Christmas peacefully.

Responding Friday, Papuan Military Regional Command spokesman Col. Inf. Muhammad Aidi said troops were in the region to carry out the country’s duty to protect people.

“If Gov. Lukas Enembe is to support the independence of the Papuan separatist movement and reject the national strategic program policy, then he has violated the law and should be prosecuted in accordance with the law,” Aidi said, adding, “most of our soldiers are also Christians.”

“I want to emphasize the violence that took victims and resulted in the trauma of the people in Nduga is not because of the presence of the military and police officers in the area,” he said.

Victor Mambor in Jayapura, Indonesia, contributed to this report.

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