November 22, 2018 / 1:06 PM / in 24 days

Indonesia to settle Freeport environment issues in weeks - ministry official

JAKARTA, Nov 22 (Reuters) - Indonesia's environment ministry aims to resolve within two weeks environmental issues that have been holding up the state's plans to acquire a majority stake in Freeport McMoRan Inc's Grasberg copper mine.

That deal, where Indonesia and state-owned miner PT Inalum will control a 51.23 percent stake in PT Freeport Indonesia, is expected to end years of wrangling over ownership rights to Grasberg, the world's second-biggest copper mine.

But the planned $3.85 billion series of transactions are still subject to environmental clearances and a special mining permit by the Indonesian government after a 2017 audit found the mine to be in breach of environmental rules.

The environmental report said Freeport had allowed tailings from the mine to extend beyond previously agreed limits, polluting coastal areas, and that the Phoenix, Arizona-based company had operated in areas of Papuan forest without a permit.

Freeport has said it complies with Indonesia's environmental rules.

Environment ministry inspector general Ilyas Asaad said on Thursday his office had issued preliminary documents for Grasberg's environmental clearance.

The government and Freeport would finalise a tailings management "roadmap" in the coming weeks, he said.

"We are making steps on how to manage total suspended solids, and how to use the tailings more," Asaad told parliament.

"It's impossible to transport all the tailings, so it's best to use them to make bricks, roads (and) bridges."

The government is also calculating a fine for Freeport for using forests without a proper permit, Environment Minister Siti Nurbaya Bakar said. Bakar also said she had asked her office to resolve their calculations within two weeks.

There were still on three or four issues left to resolve, Bakar said.

Earlier this month, Inalum raised $4 billion in its first U.S. dollar bond offer, to fund the Grasberg deal.

The transaction is expected to close in late 2018 or early 2019, but Freeport is "not popping champagne bottles yet," Chief Executive Richard Adkerson said on a conference call last month.

Writing by Fergus Jensen. Editing by Jane Merriman

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