Ayomi Amindoni – House of Representatives Commission VII overseeing the energy sector has described a share value that PT Freeport Indonesia offered to the Indonesian government as unrealistic.
Freeport Indonesia must explain the basis of valuation for the offering price of US$1.7 billion (Rp 23.69 trillion) for 10.64 percent of its shares to the government, said Commission XI member Ramson Siagian.
"We want a realistic calculation. They must give a realistic offer, by taking into account the updated market situation," Ramson said in a meeting with Freeport Indonesia at the legislative complex in Jakarta on Wednesday.
The price, he continued, was too high as the market value of Freeport McMoran was currently around $4.8 billion, amid a fall in the share price in the market to around $3.85 per unit.
Likewise, Indonesian Democratic Party of Struggle (PDI-P) lawmaker Fallah Amri urged the government to review the price as it was made based on the company's assumption.
The Energy and Mineral Resources Ministry's minerals and coal director general, Bambang Gatot Ariyono, said the government would form a special team to calculate a fair price for the stake.
"The $1.7 billion was based on the assumption the company made. However, that is not the government's benchmark. It will be evaluated by the team," Bambang said.
Meanwhile, Freeport Indonesia vice president Clementino Lamori confirmed that the share price offered to the government was calculated assuming Freeport Indonesia continued operations after the contract was renewed in 2021. "Including the investment of $4.3 billion for underground mining and $15 billion for the development of underground mining," he said.
Freeport Indonesia must sell the government a 10.64 percent stake in the huge Grasberg copper and gold mine in Papua as part of the process to extend its operating contract beyond 2021.
Under current regulations, the central government will be first in line to purchase the shares, followed by Papua's provincial and regency/municipal administrations, state-owned enterprises (SOEs) and local administration-owned enterprises.
They have to express their interest within 60 days after Freeport's offer. If none are interested, the right to buy the shares will be taken over by private Indonesian companies. (ags)(+)