Indonesia 'requests' 51% of Grasberg, Freeport agrees to 9.3% 'at the moment'. What happens next?

Grasberg is the world's largest gold and third-largest copper mine with a history that dates back to the 1930s.

The storied mine in the remote Indonesian province of West Papua has been the jewel in the crown of Freeport-McMoRan Copper & Gold Inc (NYSE:FCX) for decades and the Phoenix-based company keeps a tight grip on the project despite frequent worker strikes, occasional outbreaks of sectarian violence and political interference.

Now however, the tide of resource nationalism sweeping the developing world, may be catching up with Grasberg and Freeport Indonesia.

Yesterday, Indonesia's coordinating minister for the economy Hatta Rajasa told reporters that Freeport Indonesia has agreed to sell a stake via an initial public offering (IPO) in Indonesia:

"They (Freeport Indonesia) agreed to divest a stake, but there's no agreement on the 51 percent that we requested."

"I have asked them to divest and they agreed."

"We agree to sell a stake, but at the moment we only agreed to 9.36 percent."

Indonesia surprised the global mining community in March with a new rule that forces all foreign mining companies to sell majority stakes in their mining operations to locals by the tenth year of production.

Although ostensibly Government Regulation No. 24 of 2012 does not apply to existing projects like Grasberg that came into being under Indonesia's Suharto regime, polite "requests" for control may become edicts in future.

Freeport McMoRan was trading 3% weaker on Tuesday and is down 8% since Friday after releasing an earnings report for the first half of the year that showed profits tumbling nearly 50% compared to last year.