Freeport Indonesia agrees partial IPO: minister

Indonesia said Monday the local subsidiary of US mining giant Freeport-McMoRan was willing to sell a stake on Jakarta's stock market, but had not agreed to divest the majority share the government sought. Indonesian authorities announced a new law in March cutting maximum foreign ownership in mining companies from 80 percent to less than half, in a bid to keep a larger portion of revenues from the country's vast natural resources. Freeport Indonesia's Grasberg project in the restive province of Papua is the world's biggest gold and second-biggest copper mine, employing more than 20,000 people. "They (Freeport Indonesia) agreed to divest a stake, but there's no agreement on the 51 percent that we requested," Coordinating Minister for the Economy Hatta Rajasa told reporters. "I have asked them to divest via an initial public offering (IPO) in Indonesia and they agreed." Freeport Indonesia said it has agreed to sell 9.36 percent of its share. "We agree to sell a stake, but at the moment we only agreed to 9.36 percent," a Freeport Indonesia spokesman told AFP. "Freeport-McMoRan have offered 9.36 percent of Freeport Indonesia's shares in Indocopper Investama to the Indonesian government." Indocopper Investama is the Freeport subsidiary that owns and operates Grasberg mine. "The government has offered them to the local government of Papua which has showed interest. IPO is an option," the spokesman added. Freeport Indonesia's US parent company owns the vast majority of the firm. Earlier this month, Freeport Indonesia president Rozik Soetjipto was quoted saying an IPO was being "considered" by the company. "The IPO would be good for Freeport Indonesia," he told the Jakarta Globe newspaper, adding that it would make the company "more accountable and transparent". The new regulation obliges foreigners to reduce their holdings to below 50 percent by selling shares to Indonesians over a 10-year period, but only applies to new mining concessions. Rajasa said he "cannot force" Freeport to sell such a stake in its local subsidiary as there was no requirement to do so in its original contract. Indonesia, Southeast Asia's largest economy, has some of the world's biggest untapped mineral reserves, including tin, nickel, copper and gold. A three-month strike over wages and work conditions at the Grasberg mine last year turned violent, with at least eight people killed in ambush attacks and clashes with police. The strike ended in December.