Jakarta, CNN Indonesia – Ignasius Jonan seemed calm in explaining the matter of PT Freeport Indonesia’s share ownership one afternoon last August. However, that answer does not yet answer the question: how will the government control the giant mining company’s shares later?

“This will be discussed separately because this is an internal government mechanism,” said Jonan at the Ministry of Energy and Mineral Resources. “So let us just go to it later.”

He was not alone that afternoon. Finance Minister Sri Mulyani Indrawati and Freeport-McMoran Chief Executive Officer (CEO) Richard Adkerson are standing next to Jonan.

The government, through the Ministry of State-Owned Enterprises (BUMN), began to move. The institution is currently preparing the State-Owned Enterprises Mining holding company to absorb the divestment of shares, aka the divestment of Freeport Indonesia’s shares, which amounted to 41.64 percent of the total 51 percent.

Meanwhile, 9.36 percent has been controlled by the government. The value of the total 51 percent of the shares is estimated at hundreds of trillions of rupiah.

The issue of forming a Mining holding company has been echoing since 2016, but the natural form of synergy has never appeared.

Deputy for Restructuring and Business Development of the Ministry of State-Owned Enterprises (BUMN) Aloysius K. Ro explained that the mining sector holding is the readiest to be realized of the six other sector holding companies.

“Several regulatory issues that still exist will continue to be discussed and discussed in ministerial meetings,” Aloysius told CNN Indonesia.com, Monday (4/9).

Aloysius continued, the main State-Owned Mining Company’s legality process had completed the harmonization stage carried out by the Ministry of Law and Human Rights.

Deputy for Mining, Strategic Industry, and Media at the Ministry of Stated-Owned, Fajar Harry Sampurno, said that the holding company’s formation for mining SOEs is still awaiting investment or Government Regulation (PP).

Go On Divestment

PP Inbreng is the legal umbrella for the union of PT Indonesia Asahan Aluminum Persero (Inalum) as the holding company with other companies, namely PT Antam Tbk, PT Timah Tbk, and PT Bukit Asam Tbk.

“Now the PP is still at the Ministry of Finance,” he said.

If the mining holding does not end, he said the Freeport share divestment process would continue.

To do this, the government will form a consortium to detail the distribution of the divestment of Freeport Indonesia’s shares, which has been agreed upon at 51 percent.

This consortium will include state-owned mining companies, Regional-Owned Enterprises (BUMD), national and foreign banks, and employment social security (BPJS Ketenagakerjaa)n, which have expressed interest in buying Freeport shares.

“We will cooperate with the central government, provincial governments, and local governments through State-Owned Enterprises (BUMN) and Regional-Owned Enterprises (BUMD),” said Fajar.

Despite involving government officials at various levels, Fajar revealed that the central government would receive a larger share.

However, he is not yet willing to reveal the price calculation scheme that will be used.

An independent team tasked with reviewing the percentages of each prospective new shareholder is also being prepared.

“Later, Freeport will appoint; the government will also appoint. This weekend, I hope the scheme is transparent, “said Fajar.

The divested share value is also planned to be calculated at a fair market value.

Freeport Indonesia is also not allowed to freely calculate the gold and copper reserves in Grasberg as the basis for calculating the share value later.

“But if the reserves are proven, they can also pay royalties. That can be taken into account,” said Fajar.

Energy and mining observer from Tarumanegara University Ahmad Redi said that the agreement’s point through negotiations between Freeport and the government did not benefit.

It is because the points of the negotiation agreement still contain problems.

He assessed that the purchase of divestment shares at the end of the Contract of Work (KK) is a policy that is detrimental to Indonesia.

“Regarding the divestment of shares by PT Freeport, in fact, in the 1991 extension Contract of Work (KK), there is an obligation to divest shares of PT Freeport, which should have been 51 percent owned by the Government in 2021,” he said.

Potential for Corruption

Not only about stocks, but the potential for fraud also needs to be watched out for.

Indonesia’s National Publish What You Pay (PWYP) Coordinator Maryati Abdullah stated that the Corruption Eradication Commission (KPK) must oversee the share sale process. According to him, this was due to the potential for state losses and allegations of corruption.

“The Corruption Eradication Commission (KPK) needs to supervise officials with those who carry out that function. Is it suspected that there is a conflict of interest, bribery, or kickback,” he said.

Furthermore, Ignasius Jonan also answered “kepo” which means ‘nosy’ in Bahasa, which appeared last August at the beginning of this month. However, it also has not answered the whole question.

He stated that his party also involved the Papua Provincial Government and the Timika Regency Government to sell the shares – currently still in the negotiation process.

“It is the same as the Mahakam Block; after the total contract expires, it is now managed by Pertamina,” said Jonan on the Cabinet Secretariat website, Tuesday (5/9). “Do not let us manage it ourselves less well.” (asa)