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Kamis, 02 Mei 2024

Minister of Investment: Indonesia to Increase Ownership in Freeport to Support Downstream Industry

Banjarbaru, May 2nd, 2024 – The Minister of Investment/Chairman of Indonesia Investment Coordinating Board (BKPM) Bahlil Lahadalia conveyed the government's plan to increase share ownership in PT Freeport Indonesia (PTFI) while extending the company's Special Mining Business License (IUPK) contract until 2061. Bahlil conveyed this during a public lecture at Lambung Mangkurat University, Banjarbaru today, Thursday (02/05).

Bahlil said the purchase of the government's stake in PTFI is in line with the government's policy to build downstream in Indonesia, particularly in the electric vehicle (EV) ecosystem. By having a larger stake, the government will benefit from the dividends and will also support the government's downstream policy.


"Freeport is now an Indonesian government-owned company since we are already the majority. We bought more or less almost USD4 billion. And from that income, now the 2024 dividend has almost been paid off with that income," said Bahlil.


Bahlil also mentioned that as a majority shareholder of PTFI, the government can smoothly implement downstream policies, particularly for copper. Bahlil told the story of how the construction of the PTFI smelter in Gresik finally took place due to strong encouragement from the government.


"USD3 billion (to) build a smelter in Gresik. Now it is finished and will operate in May. There we can produce copper cathodes. Of the 3 million concentrates brought from Timika to Gresik, it will produce 400 thousand tons of copper cathodes, 60 tons of gold," told Bahlil.


Bahlil also mentioned that PTFI's contract extension was inseparable from the company's plan to produce copper wire. Copper wire is a processed copper product that can generate 24 times the value of raw copper. Bahlil said that by producing copper wire, Indonesia will be closer to realizing the ecosystem of the electric vehicle industry from upstream to downstream in the country.


"If the copper is there, we will build a car factory. Copper wire to wrap the battery, so we build the entire ecosystem in Indonesia. Thus, we become a respected producer in the world," Bahlil said.


Moreover, Bahlil reiterated the direction of government policy related to downstreaming. According to him, the country must have a clear policy direction.

"What is the purpose of our nation and state? Creating prosperity. That is one of our goals. Through what? Managing natural resources. As stated in Article 33 of the 1945 Constitution of the Republic of Indonesia," said Bahlil.


Furthermore, Bahlil reminded Indonesia not to repeat the same mistakes by only exploiting raw commodities.


"We once had oil wealth. We were once part of OPEC (Organization of Petroleum Exporting Countries). Now we are no longer included in OPEC, why? Because our oil consumption per day is 1 million 500 barrels per day. Meanwhile, our production is only 625 thousand barrels per day. We import 870 thousand barrels per day. We are oil importers," he continued.


According to him, it happened because of improper policy. That is why the government needs to redirect the policy to develop downstream. Our goal is to accelerate national economic growth and create quality jobs towards an equal and prosperous Indonesia.


"When we had a lot of oil, (why) we didn’t build downstream industry? Did we have enough refineries? We had a timber golden age. Logs in Kalimantan, in Papua, in Maluku. They were all great. But we export all the logs," Bahlil closed the speech passionately. (*)



For further information please contact:

Ricky Kusmayadi

Head of Communication and Information Services Bureau

Ministry of Investment/BKPM

E-mail: rickykusmayadi@bkpm.go.id


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