MINING DIVESTMENT

SHARE FOR FREEPORT TO

INDONESIA
Made by amazing people
Bagus Fadhilah Apriadi (08211840000068)
Muhammad Rizqi M (08211840000073)
Maulidia Dwi A (08211840000078)
Rizqi Fitriyanto (08211840000083)
 OUTLINE
1. THE IMPACT FOR THE LOCAL

2. THE PROCESS OF GETTING THE SHARES

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 THE IMPACT
FOR THE LOCAL
1 . PA P UA
2. THE MINE

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 THE IMPACT OF MINING DIVESTMENT SHARES FOR PAPUAN

BEFORE AFTER

• It’s been 50 years since PT • Papuan people ask for the involving
Freeport Indonesia operates in of discussion about the future of
Timika without giving Papuan mining industry in Papua
any benefit
• Eastern Papua causes the • With 51% of share collected by
development of Papua slower Indonesia through Inalum, welfare of
than other parts of Indonesia the Papuan people could be
increased and improved
• The environment around the
mine are bad, especially for • In the future, Papuan must have a
Amungme and Kamoro tribes company that manages the mine
(their social life are being itself so the region could control
worsened by PT Freeport’s their natural wealth and use it for
presence)
• Mine waste disposal, It disturbed
mutual prosperity
local residents which is working
as fisherman decades ago
• The welfare of the local
community isn’t considered
enough by Freeport

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THE EXAMPLE OF
MINING IN PAPUA
Indonesia is one of the most rich in natural
resources. The famous one is for the gold and
copper in Papua. This situation is making Papua as
a place to mine. The company that runs the gold
and copper in Papua is PT Freeport, it was one of
the biggest gold and copper company in the world.
It has two mine in Papua, there are Grasberg mine
(since 1988) and Estberg mine (since 1967).
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GRASBERG MINE
 The Grasberg mine is the largest gold mine and the
second largest copper mine in the world. It is
located in the province
of Papua in Indonesia near Puncak Jaya, the highest
mountain in Papua.
 The mine workings include a very large open pit
mine, an underground mine and
four concentrators. The open pit mine – which
forms a mile-wide crater at the surface – is a high-
volume, low-cost operation, producing more than
67 million tonnes of ore and providing over 75% of
the mill feed in 2006.
 Ore undergoes primary crushing at the mine,
before being delivered by ore passes to the mill
complex for further crushing, grinding and
flotation. Grasberg’s milling and concentrating
complex is the largest in the world, with four
crushers and two giant semi-autogenous
grinding (SAG) units processing a daily average of
240,000 metric tonnes of ore in 2006.
 The mine is located within what used to be a small
equatorial mountain glacier. Steepening of slopes
related to mining activities, as well
as earthquakes and frequent heavy rainfall, have
resulted in landslides within the open pit mine.
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THE EXAMPLE OF
MINING IN PAPUA
Indonesia is one of the most rich in natural
resources. The famous one is for the gold and
copper in Papua. This situation is making Papua as
a place to mine. The company that runs the gold
and copper in Papua is PT Freeport, it was one of
the biggest gold and copper company in the world.
It has two mine in Papua, there are Grasberg mine
(since 1988) and Estberg mine (since 1967).
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ESTBERG MINE
 In 1959, a Dozy report containing
research on Mountain Estberg
(Copper Mountain) in West Irian
reached the ears of Forbes
Wilson, a Freeport geologist.
Wilson then followed up by
going to Papua. He arrived in
1960 and was amazed by the
"mound of treasure" at an
altitude of 2000 meters above
sea level. He was so fascinated
by the expanse of copper ore
that lay wide on the ground.
Which was then managed and
became the Estberg mine.
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 THE IMPACT OF MINING DIVESTMENT SHARES FOR THE MINES
• The increase of state revenues
• Tax revenues
Tax revenues are taxes which are the authority of the government according to the
provisions of the legislation and import duties and excise
• Non-tax State Revenue a.k.a PNBP
• Fixed fees
• Exploration fees
• Production frees
• Information data compensation
• Regional income
• Local taxes
• Regional retributions
• Other legitimate income based on the provisions of the legislation

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 PROCESS OF
GETTING THE
1.
SHARE
CHALLENGE OF INALUM
2. HOW MUCH MONEY
T H AT ’ V E S P E N T BY I N A LU M
3. PROCESS OF GETTING THE
SHARES
4. LEGAL LAWOF MINING
DIVESTMENT
5. BENEFIT OF FREEPORT’S
SHARE FOR INDONESIA

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 CHALLENGE OF INALUM
Inalum are faced with some challenge
• Human resources
• Technology
• Public speaking
• Synchronization with the government
• Smelters.

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 HOW TO OMPTIMIZE PROFIT AFTER FREEPORT’S ACQUISITION BY INALUM?

• Improve infrastructure capabilities (logistics & ports)

• Selling directly to premium end users
• Reducing brokers
• Avoid transfer pricing (sell products at low prices to companies that are
abroad, then make new companies abroad, and sell them back to the
country at high prices). This is very detrimental and makes production
costs high.
• Provide competitive prices

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 HOW MUCH MONEY THAT’VE SPENT BY INALUM
• PT Indonesia Asahan Aluminum (Perseso) acquired 51.3% of PT Freeport
Indonesia’s shares from a loan commitment of US $ 5.2 billion,
equivalent to Rp74.8 trillion. Goverment throught holding inalum state-
owned (BUMN) mining company officially holds 51.38% shares of
Freeport McMoran Inc. (FCX), holds 9.36% ownership in Freeport
Indonesia.

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 PROCESS OF GETTING THE SHARES
• The Central Government, the Government of Papua, the Mimika Regency
Government and PT Indonesia Asahan Aluminum (Persero) (PT Inalum) signed
the agreement on PT Freeport Indonesia (PTFI) Divestment shares at the
Ministery of Finance on Friday (12/10/2018).
• The people that signed the agreement was the Minister of Finance, the
Minister Energy and Mineral Resources (ESDM), the Governor of Papua, the
Regent of Mimika, and the President Director of PT Inalum, and was initialed
by the Deputy of Mining Business, Strategi Industry and Media, Ministry of
State-Owned Enterprises (BUMN) representing the Minister of BUMN.
• The agreement signed was one of most advance and strategic steps in the
acquisition of PTFI’s divested shares after the agreement reached between the
Government of Indonesia and PTFI on 27 August 2017. This agreement is a
Government manifestation of th spirit of togetherness between the Central
Government, Regional Government and BUMN in the proscess of taking PTFI
divestment shares.

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 LEGAL LAW OF MINING DIVESTMENT
• Divestment share of mineral and coal company were done step by step
based on law No. 1 Year 2017 Article 97 verse 2. The company must do
divestment shares about 20% on the 6th year since production, the 7th
about 30%, the 8th year about 37%, the 9th year about 44%, and the
10th year about 51% of the stock number

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 BENEFIT OF FREEPORT’S SHARE FOR INDONESIA
• Indonesia government is suppressing the initial agreement of the
agreement points, Head of Agreement (HoA), with Freeport McMoran to
take over the 51% stock in PT Freeport Indonesia. With this HoA , the
divestment price is locked at US$ 3,85 billion
• There are some main agreement that signed in HoA
• IUPK
• 51% of divestment shares is for Indonesia
• Freeport must build the smelter facilities in Indonesia
• National income agreegately is bigger than national income through Kontrak
Karya
• Operational extension is maximum 2x10 years until 2041 will be given after
Freeport doing the agreement that conduct in IUPK OP

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THANK YOU
ANY QUESTION ?

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