Directorate General of the Ministry of Industry I Gusti Putu Suryawirawan together with Director of Inalum Budi Gunadi Sadikin reviewed Aluminum Billet's diversified factory INALUM in Kuala Tanjung - Photo by Industry Ministry

JAKARTA (TheInsiderStories) – President Joko Widodo has pocketed the offering price of 40 percent participating global miner Rio Tinto Group (ASX: RIO) in PT Freeport Indonesia (PTFI), said one official on Tuesday (05/06).

The deputy for State-Owned Enterprises Minister Fajar Harry Sampurno admitted the consortium of PT Indonesia Asahan Aluminium (Inalum) has set the offering price but declined to comment its value size. He only said, ” Its on president’s hand. Later he will decide whether agree or not agree,” He said.

President Director of Inalum Budi Gunadi Sadikin itself told reporters on Monday (05/06) unsure the closing deals with U.S’s gold and copper miner Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) to be close in this month. Previously Minister Energy and Mineral Resources Ignasius Jonan confident the deals will close in June.

“The Deal is not easy. Its complicated. One of the hardest of my 25 year career in the banking sectors,” he told reporters.

In the recent time, the discussion with Freeport and global miner Rio Tinto Ltd. (ASX: RIO) on the divestment of 40 percent interests in the giant Grasberg copper and gold mine in Papua is still on going.

The Australian miner said no agreement has been reached and there is no certainty that binding agreements would be signed, noting reports of the potential purchase by Inalum of Rio’s interest in Grasberg for US$3.5 billion.

“Rio Tinto confirms that discussions between Rio Tinto, Inalum and Freeport are ongoing, including as to price,” Rio said on May 23 to the Australian Stock exchange.

The company has moved into direct negotiations with the Indonesian government over the proposed sale of its 40 percent share of future production from the Grasberg mine. Rio Tinto has a joint venture with Freeport for a 40 percent share of production above specific levels until 2021 and 40 percent of all production after 2022.

Currently, Freeport has asked for a guarantee on rights to mine Grasberg up to 2041 before committing to billions of dollars of planned underground mine investments and a second Indonesian copper smelter.

The discussions have dragged on for several years and have been a major distraction for Freeport’s management team, which is led by chief executive Richard Adkerson. However, in recent months the outlines of a deal have emerged.

For Rio, selling down its interest in Grasberg would allow the company to exit a challenging mining jurisdiction and focus on its core assets. It would also open Rio’s share register to investors who cannot invest in the company because of environmental concerns related to some of the processes used at Grasberg.

But, it offered few new details, disappointing analysts who said the talks were likely to drag on. Freeport had hoped to reach a deal by the end of June when a temporary mining license is due to expire.  

In the mean time, share price of RIO is in retreat even as our biggest iron ore producer took a step closer to selling its stake in Grasberg mine. The news wasn’t enough to keep investors onside today as weaker commodity prices gave the market an excuse to sell mining stocks with Rio Tinto shedding 1.7 percent.

Email: linda.silaen@theinsiderstories.com

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The Insider Stories Founder Linda Silaen has a solid, proven history, established over more than a decade as a journalist with a leading internasional news organization, of being the first with the biggest economic news stories in Indonesia. Specializing in corporate news, Linda is also a veteran of some of the biggest macroeconomic and general news stories as Indonesia rapidly transforms into a major market economy. One of the founders of the original blog from which this company developed, Linda’s knowledge of investors’ information communications and data us developed from unrivaled networking skills that make her a well-known name among CEOs, bankers, government officials and private equity investors both in Indonesia and other countries.

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