US-based mining company Freeport-McMoRan's (FCX) subsidiary PT Freeport Indonesia (PT-FI) has reached an agreement to provide 51% of its shares to the Indonesia Government.
Under the agreement, operations at the Grasberg minerals district in Indonesia will now be carried out under a special mining business licence (IUPK), having previously been based on a contract of work (CoW),
In addition, PT-FI has agreed to build processing and refinery facilities or smelters in Indonesia. The company has also secured an extension for the Grasberg mine, increasing its life until 2041.
Indonesia Minister of Energy and Mineral Resources Ignasius Jonan said: "The result of this negotiation is in accordance with the instructions of president Joko Widodo to prioritise the national interest, the interests of the people of Papua, the sovereignty of the state in the management of natural resources, and keep the investment climate remains conducive.”
The government expects to receive more revenue under the new arrangement.
According to PT-FI, the agreed framework will support long-term investment plans in Papua.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Freeport-McMoRan president and CEO Richard Adkerson said: "We are pleased to announce an agreed framework to support our ongoing operations and investment programme in Papua.
"Reaching this understanding on the structure of a mutual agreement is significant and positive for all stakeholders."
In the Grasberg minerals district, PT-FI has rights to conduct exploration, mining, and production activities in the 24,700-acre Block A area, and explore the Block B area currently covering 502,000 acres.
In March this year, the Indonesian Government introduced a new policy requiring foreign mining companies to reserve a 51% stake for domestic companies.