* IPO seen as more transparent than direct offer
* Divestment among requirements to extend Freeport contract
* Government previously rejected $1.7 bln offer for stake
(Adds quotes, context)
By Fergus Jensen
JAKARTA, Nov 23 The Indonesian subsidiary of
Freeport McMoRan Inc hopes to sell a 10.64 percent stake
through an initial public offering, its new chief executive said
The government requires Freeport Indonesia, the country's
top copper miner, to divest the stake and "the two sides see
that going to the stock exchange is the best option," incoming
CEO Chappy Hakim told reporters in his first meeting with media
since his appointment.
Under a 2014 memorandum of understanding (MOU) with the
government, Freeport agreed to divest a 30 percent stake by 2019
and invest in domestic processing to win an extension of its
contract beyond 2021.
The government already has a 9.36 percent stake in
Freeport's Indonesian operations, and had hoped to take another
10.64 percent stake this year, but negotiations stalled after
the government valued the stake at two-thirds below Freeport's
offer price of $1.7 billion.
It would be difficult to reach a deal on a price for the
stake if it is sold in a direct offer, Hakim said, speaking at a
hotel in Jakarta late on Wednesday.
"We will never reach an agreement because interests from
many sides are very influential in price-setting," he added.
"Freeport is more politics than business."
Freeport's Grasberg operation in Indonesia's far-eastern
Papua region is one of the world's largest copper and gold mines
and a key source of state revenue.
Freeport is negotiating with the government for an extension
of its Grasberg contract, which is due to expire in 2021. The
company, looking to invest $18 billion to transition Grasberg
from open pit to underground mining in 2017, wants to finalise
an extension before it signs off on the expansion or build a
Phoenix, Arizona-based Freeport's long-held aim to continue
mining in Indonesia beyond 2021 has been beset by resignations
and a political scandal.
Former parliament speaker Setya Novanto resigned in December
after being accused of trying to extort shares from Freeport
worth $1.8 billion. He denied the charges.
"An impact of listing a company is openness, fairness and
transparency and this will really help," Hakim said.
An IPO would be conducted "as soon as possible," Hakim said,
but noted that it related to the company's efforts to extend its
contract of work and was still subject to discussions.
It is unclear if the Indonesian government will buy the
stake when it goes on sale.
Energy and Mineral Resources Minister Ignasius Jonan could
not immediately be reached for comment on the matter on
On Tuesday Jonan told reporters that an IPO may be allowed
if regulations permitted the company to do so.
"We'll see," he said, noting that the government had not yet
issued a regulation that would allow Freeport to extend its
contract before 2019.
(Reporting by Fergus Jensen; Additional reporting by Bernadette
Christina Munthe; writing by Fransiska Nangoy; editing by David