JAKARTA. Ministry of Energy and Mineral Resources (ESDM) will immediately release the regulation on the divestment of mining companies’ shares.

The regulation will stipulate that the prices of the divested shares should refer to the market prices. Aside of the price scheme, the divestment will be carried out through initial public offering (IPO).

Deputy Minister of ESDM Arcandra Tahar said mining companies, such as PT Freeport Indonesia should be subject to this regulation. In this case, Freeport cannot include the amount of reserves for contract extension up until 2041, as offered to Indonesia. "This rule will be released in the near future," said Arcandra, Saturday (21/1).

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Arcandra said that Freeport has obligation to divest 51% of its shares by this year. If the regulation is released, Freeport has to comply with this regulation. The future Minister of ESDM regulation will set the fair value of the share price for the divestment. According to Arcandra, the price estimation will include the value of assets until the contract termination.

The contract of work of Freeport will expire in 2021. Arcandra said that the government has not yet approved the extension of Freeport’s contract. In other words, the copper and gold reserves of Freeport since 2021 to 2041 will be owned by the Government of Indonesia.

Unfortunately, the Spokesman of Freeport Indonesia Riza Pratama refused to give comment related to this matter. Riza said that Freeport is still assessing the Government Regulation No 1/2017 on Mineral and Coal Businesses, mainly in terms of the obligation to divest 51% of the company’s shares. “Previously, underground mine only has to divest 30% of its shares,” he said.

Director General of Mineral and Coal of Ministry of ESDM Bambang Gatot Ariyono added the divestment of 51% of shares will apply to all contract of works. “This will be settled under the contract amendment,” he said.

However, the divestment scheme through IPO will bring opportunity for the old investors, including Freeport to buy back. (Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie