Freeport concludes contract renegotiation
Tuesday, July 8 2014 - 12:55 AM WIB
Following years of negotiation process, gold and copper giant PT Freeport Indonesia has finally agreed on the six main points of mining contract renegotiation proposed by the government, paving the way for the company to obtain permit to resume export.
"The report from the negotiating team says that Freeport has agreed on (all of the main points of) contract renegotiation" said Coordinating Minister for the Economy Chairul Tanjung on Monday.
He said that the results will be discussed at a cabinet meeting for approval, expected this week. The company and the government will then sign an MoU on concluding the mining contract renegotiation.
The amendment of the mining contract is stipulated under the 2009 Mining Law. By concluding the contract renegotiation process, Freeport has agreed to among others increase the royalty of gold, silver and copper, divest up to 30 percent shares to Indonesian investors, reduce concession size and build domestic smelter.
Freeport plans to build a 400,000 tons per year copper cathode smelter in East Java. The company has also put down a US$115 million deposit with the government's bank account to show seriousness in building the smelter.
By concluding the contract renegotiation and meeting the other requirements, PT Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Copper and Gold, is expected to soon obtain export recommendation from the Ministry of Energy and Mineral Resources, which will allow the company to resume export of copper concentrates which have suspended since January 12 of this year following the introduction of tighter export requirements by the government.
The progress made by Freeport was in contrast with the move by PT Newmont Nusa Tenggara, which filed international arbitration against the government.
Elsewhere, Chairul said that Freeport is among of the 40 mining firms which have agreed on the entire main points of contract renegotiation.
He hoped similar agreement could be reached with the other remaining 67 firms in September of this year before the end of the term of the current administration.
Editing by Reiner Simanjuntak