Indonesia Considers $1.7 Billion Stake in Freeport Unit

  • Miner offers almost 11 percent of unit, according to minister
  • Freeport operates giant Grasberg copper and gold mine

Freeport-McMoRan Inc. has offered Indonesia a stake of about 11 percent in its local unit for $1.7 billion, according to a government official, as the world’s biggest publicly traded copper producer negotiates to extend its operations in the country.

The government will evaluate the company’s proposal that it buy 10.64 percent of Freeport Indonesia, Bambang Gatot Ariyono, director general of mineral and coal at the Energy and Mineral Resources Ministry, said Thursday by phone. Freeport’s Grasberg operation in the nation ranks among the world’s 10 largest copper mines, according to Wood Mackenzie Ltd.

Phoenix-based Freeport, which mined $2 billion in copper and $1.4 billion in gold in 2014 from Grasberg, is seeking to extend its contract to operate in Indonesia, which expires in 2021. Freeport Indonesia has agreed to sell shares as part of that negotiation.

Eric Kinneberg, a Freeport spokesman, confirmed by e-mail that Freeport submitted a valuation report to the government at its request, but did not confirm the amount.

The company’s shares have fallen to the lowest since 2000 as raw materials prices decline amid worries that the economic slowdown in China, the top commodities consumer, is worse than anticipated. The rout has pressured mining giants including Glencore Plc and Anglo American Plc to seek asset sales.

Before it's here, it's on the Bloomberg Terminal.