Indonesia government: Freeport divestment offer "overpriced"

Indonesia government: Freeport divestment offer "overpriced"

The government has called an offer for a stake in PT Freeport Indonesia overpriced.

At US$1.7 billion (S$2.4 billion), the shares offered to the government by the company were overpriced, State-Owned Enterprises (SOE) Minister Rini Soemarno said on Tuesday.

Freeport Indonesia must sell the Indonesian government a 10.64 per cent stake in the huge Grasberg copper and gold mine in Papua as part of the process to extend its operating contract beyond 2021.

"What is being offered in our opinion is too high," Rini said during a press conference.

Nevertheless, the government is still evaluating the divestment offered by US-based Freeport McMoRan Inc's Indonesian unit. "We asked Danareksa and Mandiri Securities to evaluate how much the actual value really is," the minister said.

She also said SOEs were still interested in buying the shares to be divested by the gold and copper mining giant. "As state-owned firms we hope to participate in one of the world's biggest copper mines," she said, adding that the ministry and the government would discuss the continuation of the Freeport Indonesia divestment process.

A numbers of state-owned firms have expressed interest in acquiring a stake in Freeport Indonesia, including diversified miner PT Aneka Tambang (ANTAM), coal miner PT Bukit Asam (PTBA), PT Indonesia Asahan Aluminum (Inalum) and PT Timah.

The Energy and Mineral Resources Ministry's director general of coal and minerals, Bambang Gatot Ariyono, told thejakartapost.com that the assessment of Freeport Indonesia's valuation involved several ministries, including the Finance Ministry and the SOE Ministry.

"The Finance Ministry will determine who will be appointed to perform the purchase," Bambang said.

Under current regulations, the central government is first in line to purchase the shares, followed by the provincial and regency or municipality administrations.

Next are SOEs, followed by local administration-owned enterprises, which have to express their interest within 60 days of the offering. If none of them are interested, private Indonesian companies would be allowed to buy the shares.

Earlier, Finance Minister Bambang Brodjonegoro said if the government decided to purchase the shares, the 2016 state budget would need to be revised.

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