* Government plans to acquire Rio's Grasberg interest -minister
* Freeport Indonesia says negotiations have been constructive (Adds detail on government plans, response from Rio)
By Wilda Asmarini
JAKARTA, March 6 (Reuters) - Indonesia President Joko Widodo has instructed his administration to complete negotiations over the purchase of a majority stake in Freeport-McMoRan Inc's local unit by the end of April, a cabinet minister said late on Monday.
"It should be wrapped up before the end of April, valuation and all," Energy Minister Ignasius Jonan told reporters, referring to directions from President Widodo.
Indonesia cannot simply wait until Freeport's current mining contract expires in 2021 and then take ownership of its Grasberg copper mine, Jonan said.
"Freeport would still go to arbitration," he said, while the government would also need to repay Freeport for all of its investments in the mine.
Instead, the government, through a state-owned company, plans to buy a majority stake in PT Freeport Indonesia at "a reasonable price", including the purchase of Rio Tinto's participating interest in the massive Grasberg mine and converting it into shares, he said.
Freeport Indonesia spokesman Riza Pratama told Reuters by text message that talks between the sides had been constructive. "Hopefully we'll reach an agreement soon," he said.
A Melbourne-based spokesman for Rio Tinto declined to comment on the matter.
Freeport in January said it was edging closer to a permit deal with Indonesia for Grasberg, the world's second-biggest copper mine, but the miner cautioned it had not struck any formal agreements.
Freeport CEO Richard Adkerson said in October the company wanted to avoid arbitration in dealing with Indonesia's push for Grasberg ownership. Talks with Freeport over rights to Grasberg broke down in February 2017.
Rio has a 40 percent interest in Freeport Indonesia's Grasberg contract, which entitles it to a 40 percent share of all production after 2022. Rio has held talks with Indonesia about a possible exit to the venture.
There have been few signs of progress since last August, when Freeport promised to divest a 51-percent stake in Grasberg to the Indonesian government in exchange for long-term operating rights. The government currently owns a less-than-10 percent stake in Freeport Indonesia.
The valuation of the stake Indonesia plans to acquire has been a sticking point in negotiations. (Reporting by Wilda Asmarini; Writing by Gayatri Suroyo and Fergus Jensen; Editing Kenneth Maxwell and Tom Hogue)