JAKARTA (TheInsiderStories) — The acquisition process of the PT Freeport Indonesia (PTFI) majority shares to PT Indonesia Asahan Aluminum (Inalum) was completed on Friday (12/21). However, the management is still controlled by the existing owned Freeport McMoRan Gold & Copper Inc., (NYSE: FCX).
This can be seen from the new composition and structure of directors and commissioners after the final negotiations. Tonny Wenas still lead PTFI, he is representing Freeport’ interest, while President & CEO of FCX Richard Adkerson as a chairman.
Some observers questioned the deal, cause even government admitted the majority shares are owned by Inalum, but managerially dominated by Freeport. Its mean the United States miner will have a strong impact on the execution of future policies.
The tough negotiation process involving the Indonesian government, Inalum, Freeport and Australina miner Rio Tinto took two years. The process marked by a payment and issuance of Special Mining Business License for PTFI over contract of work, which had been running since 1967 and renewed in 1991 with a validity period of 2021.
With the issuance of the license, PTFI will obtain legal certainty by pocketing an extension of the 2 x 10 years operating period until 2041, and obtaining fiscal and regulatory guarantees. For this, PTFI will also build a smelter within five years.
Since 2014, President Joko Widodo has declared his intention to acquire majority shares in PTFI during his presidential election campaign, and today, that dream was realized.
“I just received a report from all involved ministers, also Inalum President Director and CEO of FreeportMcMoran that 51.23 percent shares of PTFI has been shifted to Inalum and it has been fully paid,” he said in a press conference in Jakarta.
Furthermore, Widodo stated, the regional government of Papua will get 10 percent of 100 percent of PTFI’s shares. The change in share ownership will officially occur after a payment transaction of US$3.85 billion to FCX. Furthermore, PTFI has an obligation to build a copper smelter with a capacity of 2 to 2.6 million tons per year and it is expected to be completed in less than 5 years.
In line with the downstream program of the Indonesian mining industry, Inalum and PTFI will continue to be encouraged so that the downstream process can run well, not stop at the construction of copper smelters, but also processing anode sludge as a smelter by-product into gold.”
Meanwhile, the government provides certainty regarding PTFI’s tax obligations and non-tax obligations at the central and regional levels. With the completion of PTFI’s share divestment, it can be ascertained that PTFI will contribute a greater amount of state revenue.
Inalum has secured $3.8 billion short-term loan facility from a syndicate banks led by Bank of Tokyo Mitshubisi to pay 51 percent of PTFI divestment shares. Then to pay this debt, the miner issued global bond with same amount anf use it to pay PTFI’ shares.
Written by Daniel Deha, Email: email@example.com