JAKARTA, Nov 29 (Reuters) - Indonesia President Joko Widodo urged on Thursday for an "immediate" end to issues holding up the finalisation of the state's plans to acquire a majority stake in Freeport-McMoRan Inc's Grasberg copper mine.
The 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 series of transactions that total $3.85 billion is subject to Inalum pocketing a special permit for the mine, which requires clearance on environmental matters relating to its tailings disposal, and other regulatory issues.
Papua province, home to the Grasberg mine, also rejected the proposed ownership structure for the stake in which Papua would indirectly own 10 percent of Freeport's local unit.
"I ask that all stages of the divestment process can be finished and final (and) we hope that before the end of 2018 everything is completed," Widodo said in a meeting with Inalum, Papua Governor Lukas Enembe and other government officials linked to the Freeport deal.
The president had also requested details on the status of environmental matters, according to a press release from the cabinet secretary website.
"We will use (this acquisition) to the maximum extent to improve the welfare and prosperity of the people, primarily the people of Papua," Widodo said.
A spokesman for Inalum confirmed the meeting but was not immediately able to comment on the matter.
Inalum, which earlier this month raised $4 billion in bonds to fund the Grasberg deal, had proposed that Papua hold the 10 percent stake in Freeport Indonesia via joint ownership of PT Indocopper Investama.
"This is the most efficient mechanism financially and legally," Inalum said in a statement last week.
The proposed structure was intended to prevent private companies from being involved in the Freeport transactions, Deputy State Owned Enterprise Minister Fajar Harry Sampurno told reporters on Monday.
Sampurno said the government wanted to avoid a repeat of a lengthy squabble over private investment in the state-sanctioned divestment of fellow copper miner Newmont Mining Inc's local unit.
In a media report on the Papua government website, the provincial governor Enembe was quoted as saying last week that the Inalum proposal "is not in accordance with a previous agreement", and that his government wanted to form a company that would control the 10 percent stake itself.
Since Freeport won the right in 1988 to mine Grasberg, it has been a lightning rod for grievances over impacts on the environment and revenue sharing.
The company says it is fully compliant with Indonesian environmental rules. (Reporting by Fergus Jensen; Additional reporting by Wilda Asmarini and Bernadette Christina Munthe; Editing by Tom Hogue)