JAKARTA, Oct 17 (Reuters) - Indonesia's state-owned miner Inalum is looking to finalise a $3.85 deal for majority control of the local unit of global mining giant Freeport McMoRan Inc in December, a company official said on Wednesday.
The deal, in which Inalum will control a 51.23 percent stake in PT Freeport Indonesia, is expected to end more than nine years of wrangling between Freeport and Indonesia over ownership rights to Grasberg, the world's second-biggest copper mine.
However, the planned transactions are still subject to the issue of environmental recommendations and a special mining permit (IUPK) by the Indonesian government, Inalum Chief Executive Budi Gunadi Sadikin told parliament.
"(Freeport Indonesia) is continuing to lead discussions with the Environment and Forestry Ministry," Sadikin said. "We hope this can be completed as quickly as possible."
A 2017 report by Indonesia's Supreme Audit Agency (BPK) referred to an estimate that Freeport's decades-long operations at the mine in Indonesia's remote easternmost province of Papua had caused environmental damage worth $13.25 billion.
That damage, it said, was largely a result of tailings from the mine that had extended beyond previously agreed limits and which had polluted coastal areas.
In April, in follow-up action to the audit, the environment minister issued two decrees that gave Freeport six months to overhaul the management of tailings from Grasberg. One of the decrees said Freeport would be barred from any activities in areas that lack environmental permits.
These matters have complicated the issue of a new mining permit for Grasberg, which would be held by Inalum.
Freeport Indonesia Executive Director Tony Wenas said his company was fully compliant with Indonesian environmental impact rules. Freeport hoped "in the near future the Environment and Forestry Ministry issues a policy" related to Grasberg, he said.
"We are discussing several options," Wenas said, referring to the possibility of reducing tailings sediment, methods for tailings removal and expansion of mangrove wetlands, among other options.
Last month, Freeport and its Grasberg mining partner Rio Tinto struck a binding accord to sell a majority stake in Grasberg to Inalum.
At that time, Sadikin said the transactions would be concluded in November. (Reporting by Wilda Asmarini Writing by Fergus Jensen; editing by David Evans)