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Indonesia to take controlling stake in massive gold, copper mine

AFP  |  Jakarta 

will take a controlling stake in one of the world's biggest gold and copper mines for USD 3.85 billion, the government said today, as it moves to claw back control of the country's vast natural resources.

State-owned firm will get a 51 per cent interest in the Grasberg mine, from just under 10 per cent now, said.

The agreement requires US-based to cede its ownership stake, but it will keep operating the huge complex in the jungles of Indonesia's province, officials said.

Anglo-Australian giant is also selling its interest in the mine as part of an agreement that the government said it hopes to finalise before the end of the year.

and other foreign firms operating in have been ordered to comply with new ownership rules designed to give the country more control of its plentiful resources.

The announcement comes after more than a year of see-saw negotiations about the future of Freeport's operations in the Southeast Asian nation.

The company and have sparred over the ownership structure of Grasberg and its social and environmental impact, including how the firm manages mine waste known as tailings.

"Today is a very positive and important step," told a press briefing held to announce the deal. "We have worked very diligently over these past months to meet Widodo's instruction to us to find a "

Indonesian launched the new divestment rules that pushed to relinquish control of its Papuan mining operations. Widodo, who is seeking re-election next year, said earlier today that the agreement came after "very difficult, intense" negotiations.

"This is a leap forward," he told reporters. The deal means more tax and royalties revenue for the government, he added.

The mine is a frequent flashpoint in Papua's struggle for independence from and has fuelled resentment over how much locals benefit from the region's resources.

Papua, on the western half of New Guinea island, has been the scene of a simmering independence insurgency since it was annexed by in the late 1960s.

Despite sitting atop some of the world's most abundant natural resources, successive governments have failed to take advantage of its vast riches, with critics blaming badly thought-out and nationalist policies that make the country an uncertain place to invest.

A series of regulatory changes from the government in recent years have caused jitters among miners, with some foreign firms choosing to exit Indonesia rather than deal with such an unpredictable

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, July 12 2018. 19:30 IST