REPUBLIKA.CO.ID, JAKARTA -- State-owned mining holding company PT Inalum said it has succeeded in raising enough fund to acquire a majority 51 percent stake in PT Freeport Indonesia. By doing so, it ended years of brain racking negotiations over control of one of the world largest copper and gold mines in Papua.
Indonesia's state-owned miner Inalum hopes to wrap up the financial closure of a US$3.85 transaction for majority control of the local unit of U.S. mining giant Freeport McMoRan Inc . The Indonesian government and Freeport have reached an agreement that Inalum will control a 51.23 percent stake in PT Freeport Indonesia, ending more than nine years of negotiations over control of Grasberg, the world's second-biggest copper mine in Papua.
The Sales and Purchase Agreement (SPA) was signed in September, 2018 by Inalum CEO Budi Gunadi, Freeport McMoran Inc. CEO Richard Adkerson, and Rio Tinto Indonesia. Three ministers who witnessed the SPA signing were Energy and Mineral Resources (ESDM) Minister Ignasius Jonan, SOE Minister Rini Soemarno, and Finance Minister Sri Mulyani.
Inalum said it has raised US$4 billion (around Rp54.8 trillion) from the sales of government global bond to finance the deal. The government has said the deal would be closed after Inalum made the payment.
"We have been ready for the final transaction with Freeport," head of Corporate Communication and Government Relations of PT Inalum, Rendy Witoelar told Antara news agency here on Friday.
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Rendy said the bond fund would be used to finance the transaction and the rest to refinance debts. The next steps are to settle documents related to mining business license (IUPK) with the energy and mineral resources Ministry and taxation and investment guarantee with the finance ministry.
"The global bond was the first issued by Inalum. There was no assets given as security. That indicated confidence of investors in Inalum and Indonesian economy," Rendy said.
BNP Paribas, Citi, and MUFG were the Bank Joint Global Coordinators (JGC) for the bond and BNP Paribas, CIMB, Citi, Maybank, MUFG, SMBC Nikko, and Standard Chartered as Joint Book Runner (JBR). The bond is given the rating of Baa2 by Moody's and BBB by Fitch Ratings.
The signing of Sales and Purchase Agreement (SPA) followed the head of agreement (HoA) inked by Inalum and Freeport McMoRan Inc on July 7, 2018. At that time, all parties agreed on the total divestment value of Freeport Indonesia worth US$3.85 billion.
The figure divided from US$3.5 billion of Rio Tinto's participating interest (PI) at 40 percent shares in Freeport Indonesia and US$350 million for the 5.6 percent stake of Indocopper Investama, which was owned by Freeport McMoran Inc.
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