As for the provisions of post Law No. 4 of 2009 concerning Mineral and Coal Mining stated that Freeport-Mcmoran must divest 51 percent as mandated by PP No. 1 of 2017 and ESDM Regulation No. 5 years 2017.
Based on the government agreement with U.S’s miner on August 29, 2017, the settlement of PTFI’s problems was carried out through four agreements that must be resolved simultaneously, namely changes to the legal basis of the Contract of Work (CoW) to the Special Mining Business License which is followed by an extension of the operation to a maximum of 2×10 years until 2041.
Next, the obligation to build a smelter for five years or not later than January 2022. Assuring the stability of state revenue is greater than revenue through the CoW and the divestment of PTFI’s shares was 21 percent.
Ariyono said, the Head of Agreement (HoA) which was signed on July 12 is the basis of the PTFI share divestment agreement 51 percent which contains the structure of the divestment transaction and the value of the divestment transaction. He added, the state-owned miner PT Indonesia Asahan Aluminium (Inalum) has mandated to buy PTFI’s shares.
Weeks after the signing agreement, the transaction between Inalum and Freeport has no ended. Previously EMR minister Ignasius Jonan confident the transaction will close in July until now there is no clear clue when the final transaction final.
Critics are quick to reign in the celebration by the government and its supporters who claim victories in shares divestment the PTFI. Universitas Indonesia International Law expert Hikmahanto Juwana on June 15, said that the signing is not yet a victory for Indonesia.
He said there are at least four points that need to detailed after the HoA signing. First, The HoA does not mean Freeport has officially conducted the divestment as the HoA was not a stock trading agreement, it only serves as an initial principal agreement that should be followed by a number of agreements.
Inalum still has to complete the deal to purchase 40 per cent of Rio Tinto’s stake in Freeport Indonesia. Another agreement is a share trading agreement to purchase 5.4 per cent share of Freeport McMoran through PT Indocopper Investama.
“Such agreements should be observed as there’s an adage among lawyers that says the devil is on the details,” he said.
Second, the basic term of the contract to count the Freeport Indonesia’s share price. If the concession is not renewed and will end by 2021, the price will be cheaper than if the concession gets renewed until 2041. The government does not have a certain attitude related to PTFI contract extension.
“It left a question if there are any changes in the post-2019 election, is there any obligation to stick with the HoA?” he added.
Third, the government should pay attention to the decision-making scheme at the shareholders meeting. The majority shareholders title will be useless if the decision-making scheme needs validity of attending at least 51 percent+1.
Moreover, if the remaining share owned by Freeport-McMoran holds a special status, meaning that without its presence the shareholders meeting will not reach a quorum, thus impacting the appointment of the board of directors and board of commissioners.
“If so, even though government owns majority share but the company’s control with still in the Freeport McMoran,” he said.
The government should also take notice on share dilution in the case of rights issue in the future in which the government cannot participate.
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