Jakarta. Indonesia has proposed a value for a 10.64 percent stake in Freeport-McMoran's local unit that is about two-thirds below the figure the company proposed in January.
Copper miner Freeport's unit is valued at about $630 million and the U.S.-based parent has been asked to revise its offer, an Indonesian mining ministry spokesman said on Tuesday.
Freeport had offered to sell the stake in its Indonesian operations, including the Grasberg copper and gold mining complex, at $1.7 billion in January.
Under an agreement reached with Indonesia in mid-2014, Freeport must sell the government a greater share of its Grasberg mine and invest in domestic processing to win an extension of its operating contract when it expires in 2021.
Freeport wants to invest $18 billion to expand its operations, including underground mining, but is seeking government assurances first that it will get a contract extension.
"Based on the replacement value, the government calculates [the stake] to be worth around $630 million," ministry spokesman Sudjatmiko told Reuters, referring to a 2013 regulation that sets out how the government calculates mining stakes.
In all of Freeport's agreements with the Indonesian government, the company has indicted that a sale would be at fair market value, Freeport Chief Executive Richard Adkerson said.
"That's consistent with our contract and that remains our position," Adkerson said on a conference call with analysts to discuss Freeport's first-quarter results.
The Indonesian government wants to increase its ownership of Freeport Indonesia to 20 percent from 9.36 percent currently. A further 10 percent must be divested to the government by the end of 2019.
"We have asked Freeport to revise their offer. Once we reach an agreement on price we can make a timeline," he added.
The US mining giant valued its Indonesian asset, one of the world's biggest copper mines, at $16.2 billion.
But the amount was immediately criticised by Indonesia's state-owned enterprise minister Rini Soemarno, who hoped one of two government-owned companies, miner Aneka Tambang (Antam) or aluminium producer Inalum, would buy the stake.
"We will review and respond to every statement we receive from the government," Riza Pratama, a spokesman for Freeport Indonesia, said without elaborating.
Freeport's valuation of its Indonesian unit was based on an analysis of "fair market value for the Grasberg mining operations," Pratama said.