JAKARTA • Mining company Free- port Indonesia must sell to the Indonesian government a bigger stake of its copper and gold mine in Papua - the world's biggest - as part of the process to extend its right to operate beyond 2021.
The Indonesian government is looking to increase the ownership of local parties in Freeport Indonesia to 30 per cent from a current 9.36 per cent.
The prompt divestment of another 20 per cent - worth about US$4 billion (S$5.6 billion) - to the government and the construction of a smelter to process gold and copper ores are among the preconditions for a contract extension, which the government will decide on two years before the rights' expiry in 2021.
Freeport, however, wants an early contract extension before it invests further to build the smelter and develop underground mining in the Grasberg mine. President Joko Widodo has not given any clear sign that he will extend the contract, prompting Freeport to lobby Indonesian ministers and political figures.
The divestment process came under scrutiny in the past week, with House Speaker Setya Novanto under public pressure over alleged ethical misconduct during a meeting with Freeport's Indonesian head.
The mine yielded an output of 255,000 troy ounces of gold and 154 million pounds of copper in the January to March period this year.
It has been operating for more than four decades and currently employs about 30,000 people.