Freeport claims significant progress in negotiation with government
Saturday, June 10 2017 - 05:55 AM WIB
Courtesy of Freeport
Gold and copper giant PT Freeport Indonesia said it has made significant progress in ongoing negotiation talks with the government to resolve differences over the future of its mining operations in the country.
Bisnis Indonesia quoted Tony Wenas, Executive Vice President of PT Freeport Indonesia as saying that the negotiation could be concluded sooner than the initial deadline of October 10 of this year.
PT Freeport, a local subsidiary of US-based Freeport McMoRan Inc, has been engaged in second-round of negotiation talks with a government team since early May to resolve dispute, centering on four main issues, following the introduction of a new government regulation in January of this year. The new regulation allows miners to resume export of mineral concentrates for another five years on certain conditions including the conversion of their mining permit status from contract of work (COW) to special mining business license (IUPK), put in place commitment to develop domestic smelter. As a foreign controlled company, PT Freeport is also required to divest up to 51 percent of its stake to Indonesian investors. PT Freeport is also seeking to extend its current contract, which is set to expire in 2021. The company has previously threatened to go to arbitration court if no agreement is reached with the government over the main issues.
Tony said that progress of negotiation include agreement by PT Freeport to convert its permit status into IUPK with stability of investment principle. The company has demanded for the IUPK to contain similar fiscal and legal terms as those set out in the COW, a demand initially turned down by the government. The company said that the request is made to help ensure stability of its investment in Papua where it operates the giant Grasberg gold and copper mine. Tony said that the company has invested around US$7 billion in the transformation toward underground mine operation in Papua from open-pit mine operation, and is set to invest another $15 billion. As such, the investment stability is necessary.
He said that regarding smelter, PT Freeport plans to build smelter in Gresik, East Java, and is open to possibility of a joint utilization of smelter to be developed by another gold giant PT Mineral Nusa Tenggara in West Nusa Tenggara Province.
Tony said that one of the remaining tough issues yet to be resolved is regarding the company?s request for an extension of its current mining contract to 2041.
Meanwhile Freeport CFO, Kathleen Quirk was also quoted as saying that PT Freeport Indonesia was on track to reach agreement with the Indonesian government this year. She said that without such agreement, it?s impossible for PT Freeport to continue investment in Indonesia. ?This is our priority,? she said. (*)