Government plans new policy to help resolve dispute with Freeport
Friday, March 31 2017 - 01:18 AM WIB
The paper said that the Ministry of Finance is leading a government team drafting the new policy, according to Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Bambang Gatot Ariyono.
Bambang was responding to questions from reporters, on the sidelines of a hearing with the House of Representatives Commission VII on energy and mining, regarding progress of negotiation between the government and PT Freeport, a subsidiary of US-based Freeport McMoRan Inc. He said that talks between the two are in progress. ?The government has stated it would complete the investment stability (policy) to be formulated in the form of government regulation,? he said.
Bambang said that the government initially targeted to complete the ongoing talks with PT Freeport in six months since it started in February, but the company has asked for additional two months.
The government and PT Freeport have been locked in ugly dispute over a new policy introduced in January of this year, which allows miners to continue export of mineral concentrates including copper concentrates produced by PT Freeport, but under certain conditions including converting their COW to IUPK and commitment to build domestic smelters. While PT Freeport had agreed to convert into IUPK, the company demanded the IUPK to have similar fiscal and legal terms as set in the COW regime including with regards to taxation issue to help ensure investment stability, a request which had been rejected by the government. PT Freeport has threatened to go to international arbitration if no win-win solution is reached.
Minister of Energy and Mineral Resources Ignasius Jonan said that discussions with PT Freeport are divided into three parts. The first is regarding the conversion of COW into IUPK, the second is on the conditions demanded by PT Freeport for converting into IUPK, and the third is regarding PT Freeport?s mandatory obligation of divesting up to 51 percent shares to Indonesian investors.
Ignasius said that regarding the conversion into IUPK, which applies a taxation system based on prevailing regulation instead of nailed down principle as set in the COW, PT Freeport is probably concerned over future taxes and retributions set by local regency and provincial government in Papua province, where the company operates, if the prevailing regulation principle is applied in the IUPK.
Meanwhile, Kontan quoted Ignasius as saying that the government plans to issue a temporary IUPK for PT Freeport to allow the company to immediately resume export of copper concentrates, which has been suspended since February of this year, which in turn would help the company resume production activities and prevent layoffs.
The paper also quoted PT Freeport Spokesman Riza Pratama as saying that talks with government have been progressing ?constructively.?
Meanwhile, a coalition of non-government organizations filed a request on Thursday with the Supreme Court for judicial review of the Government Regulation No 1/2017 and the two implementing ministerial rulings, which allow miners continue export of mineral concentrates, as they?re considered to be in breach of the 2009 Mining Law, which bans the export of mineral ores and concentrates. (*)