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David Fickling

Freeport 1; Indonesia 0

It's Freeport 1, Indonesia 0 as foreign direct investment in the country's rich mineral deposits dwindles.
Photographer: Dadang Tri/Bloomberg

Judging by the reaction of shareholders, the news that Freeport-McMoRan Inc. struck a deal with the Indonesian government to offload half its stake in the world's second-largest copper mine is unambiguously bad.

Freeport tumbled as much as 5.7 percent in New York on Tuesday after the biggest U.S. miner said Indonesia would buy a 51 percent interest in the Grasberg pit "at fair market value," in return for the right to operate the mine until 2041. The transaction will also involve Phoenix-based Freeport building a new smelter. A closer look, however, suggests that the winners and losers from this deal might not be the obvious ones.