Freeport ready to receive fact finding team

Copper and gold mining giant PT Freeport Indonesia is ready to receive the fact finding team, which will be established by the government to assess whether or not the company breaches its contract of works, the company's senior executive has said.

Yuli Ismartono, the compay's vice president for public affairs, said in Jakarta on Wednesday that the company supported the government's plan to establish the fact finding team.

"We welcome the government's plan to assess our operation. Please come," Yuli told reporters at the sideline of a business dialogue held in the capital.

Minister of Mines and Energy Susilo Bambang Yudhoyono said on Tuesday that the government would establish a fact finding team to find out whether or not the company breached its contracts.

The plan was unveiled by the minister at a hearing with the House of Representatives, during which some of the legislators charged Freeport, which operates giant copper and gold mining in Irian Jaya, with breaching the mandatory divestment requirement clause in its contract.

According to the contract, Freeport is required to divest up to 51 percent of its stake to local companies within 20 years after five years of commercial production. But in the reality, the company did not follow the regulation.

Yuli said that Freeport, which has operated in Irian Jaya for more than 20 years, did nothing wrong. The Law No: 20 issued by the government in 1994 allows foreign investors to own a majority stake in the mining company.

Bambang acknowledged that the existence of the law has weakened the government's bargaining power in dealing with Freeport, which has been under the spotlights late due to the controvesial result of its environment audit. The minister said his ministry would also propose the Cabinet to review the law in order to clear all the hurdles hampering the process of the mandatory requirement imposed on Freeport.

"We will respect the existing contracts? but if the company is proven to have breached the contract the government will certainly issue a punishment," he told the House members in the hearing.

Yuli said all of the company's activities were based on the existing regulations. "What we are doing is not against the law. It is based on the PP 20, and hs been approved by the Ministry of Finance, the Ministry of Mines and Energy and the Investment Coordinating Board," Yuli said in her reaction on a newspaper report on Freeport's refusal to carry out the divestment program as stipulated in the contract. (*)