Indonesia plans to increase its ownership in Freeport by 12 percent, bringing the total to 63 percent of PT Freeport Indonesia’s shares. Minister of Energy and Mineral Resources Bahlil Lahadalia stated that the government has finalized negotiations for the additional shares. At the same time, the move will extend Freeport’s mining permit.
The share increase, which coincides with the extension of Freeport’s mining business license (IUP), has drawn questions from various parties. According to Universitas Gadjah Mada (UGM) energy economics expert Dr. Fahmy Radhi, the 12 percent increase in shares is disproportionate to the 20-year extension, which is expected to last until 2061.
“The benefits for Indonesia will only come from a slight increase in dividends. However, Freeport will soon enter an underground mining phase that requires large investment and high operational costs, which will reduce profits and, consequently, dividends,” he said at the UGM Campus on Thursday (Oct. 9).
For this reason, Dr. Radhi believes that the policy of increasing shares by 12 percent, along with the contract extension, should be canceled. He emphasized that the potential costs outweigh the benefits, with the likely outcome being a decline in dividends.
“It is even possible that Indonesia will receive no dividends at all if Freeport suffers business losses in the future due to soaring underground mining costs,” he explained.
Considering the significant potential losses, Dr. Radhi firmly stated that the policy to increase PT Freeport’s shares by 12 percent could still be revoked. Although the agreement was reached during President Joko Widodo’s administration, the Memorandum of Understanding has yet to be signed.
“I believe President Prabowo can still cancel the agreement in the interest of the state,” he remarked.
Author: Agung Nugroho
Illustration: Sindo.News.com