Freeport-McMoRan Inc, the world’s second-largest publicly traded copper company, strongly disagrees with a proposed divestment plan by the government of Indonesia, according to a company letter reviewed by Reuters on Friday.
The Sept. 28 letter to Indonesia’s finance ministry reflects persistent and deep divisions between Freeport and the state, which have weighed on the miner’s stock and operations, despite a framework agreement announced in late August.
Under the framework deal, Freeport agreed to divest a 51 percent stake in Grasberg, the world’s second-largest copper mine, among other terms, and retain operational control until 2041.
The Phoenix, Arizona-based company said in a letter from its Chief Executive Richard Adkerson that it is at loggerheads over issues related to the valuation, timing and structure of the divestment.
“Freeport is prepared to discuss a path forward but cannot negotiate on the basis of the government’s September 28 proposal,” Adkerson said in the letter.
Freeport did not respond to requests for comment.
The company, which has been in talks since late 2009 on the terms of a new permit, said in the letter that it will continue operating under its current contract of work until the issues are resolved.
Under Indonesia’s divestment proposal, the government said it has the financial capacity to take over the shares by Dec. 31, 2018, Freeport said in the letter.
Freeport wants an initial divestment, as soon as possible, through an initial public offering, with full divestment done in stages over several years, the letter said.
The two sides remain divided on assessing fair market value. The government wants to base its calculations on operations at the Grasberg mine until 2021, when it says Freeport‘s contract of work expires.
Freeport maintains that valuation must extend through 2041, because it is entitled to apply for two 10-year extensions under its contract.
Indonesia also proposes that new shares be issued for the divestment, while Freeport wants existing shares to be used, adding that new shares will result in an inefficient and overcapitalized structure.
The miner also rejects a government demand that its joint venture with Rio Tinto be concluded before the divestment.
Freeport said it is preparing a so-called data room for the government to conduct due diligence.