Freeport to invest $17.5b in Indonesia

Copper and gold mining firm PT Freeport Indonesia (PTFI), which operates a giant copper and gold mine in Papua, has expressed commitment to continuing investing in Indonesia, while saying it will prepare US$17.5 billion to develop underground mines and build a smelter, the Ministry of Energy and Mineral Resources said in a statement on Thursday.

This was expressed by James R. Moffet, Chairman of PTFI, during a courtesy call on President Joko Widodo on Thursday. He was accompanied by PTFI?s President Director Maroef Sjamsoeddin, whle the president was accompanied by Minister of Energy and Mineral Resources Sudirman Said.

Moffet also underlined that PTFI will respect Indonesia?s sovereignty, the existing regulations and the agreements that had been reached by the firm and the ministry.

PTFI?s Contract of Work expires on Dec. 29, 2021 and the firm is finalizing negotiation with the Indonesian government on the continuation of the firm?s operation after the expiry of the contract.

Both parties have reached significant agreements during negotiations over the past six months. Of the 17 issues, there are only two issues which remain disagreeable to them, concerning the amount of contribution to the state revenue and the legal status of the operation after 2021. Of the 15 issues that have been agreed upon, 11 are parts of the aspirations of the central and Papuan governments and four part of the domain of the central government.

The 11 points of agreement are as follows:
1. PTFI will relocate operational headquarters to Papua
2. PTFI will improve relation with the Papua government and surrounding regencies
3. PTFI will enhance the participation of the local state owned firms (BUMD) and Papuan businessmen in sub-contracting activities
4. PTFI will use the service of national bank (Bank Papua)
5. PTFI will improve rules regarding people?s mines
6. PTFI will upgrade and transfer the operation of Moses Kilangan airport in Timika
7. PTFI will increase its contribution to the development of infrastructures in surrounding areas
8. PTFI will better manage its CSR program
9. PTFI will improve the environmental impact management
10. PTFI will formulate post-mining plan
11. PTIF will increase the role of Papuan workforce

The four points of agreement
1. PTFI will cut its working area to 90,360 ha from 212,950 ha (return 58 percent of the acreage to the government)
2. PTFI will prioritize local workforce, goods and services
3. PTFI will build a smelter in Indonesia
4. PTFI will carry out divestment, but PTFI wants to do it through IPO on the stock market

Editing by Johannes Simbolon