Government sets up four teams to negotiate with Freeport

Petromindo|Thomas

The government has set up four teams to negotiate with gold and copper giant PT Freeport Indonesia as it seeks to resolve four main issues which have put the two at loggerheads.

Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Bambang Gatot Ariyono said on Wednesday each team is assigned with one particular issue.

He said that while the teams are scheduled to hold talks with PT Freeport every week with a target to conclude the negotiation on October 10, they have yet to start negotiation with the company. He added that teams have only started discussions internally, and is still unsure was to when talks with PT Freeport will start.

This portal previously reported, quoting a ministry statement, the second-round negotiation with PT Freeport had started on May 5.

The four teams comprise of officials from the ministry and other related ministries and institutions as well as representatives of local administrations in Papua.

The statement said that there were four main issues that must be resolved by both sides. The first is the issue of long-term investment stability demanded by PT Freeport including with regards to fiscal terms and taxes both at the central and local government. Other issues are the company?s mandatory divestment obligation, requirement to develop domestic smelter, and the issue of the company?s future operation after 2021 when its current mining contract of work expires.

Meanwhile, Bisnis Indonesia quoted PT Freeport Spokesman Riza Pratama as saying that the company is committed to develop the required domestic smelter, but it can only be realized once the company?s obtains certainty about its future operation at the Grasberg mine in Papua Province, as the current contract is set to expire in 2021.

The government introduced a new regulation in January of this year, allowing mining firms to continue export of mineral concentrates including copper concentrates produced by PT Freeport on certain conditions including the conversion of their mining permit status from mining contract of work (COW) to IUPK special mining business license, and commitment to develop domestic smelter .

PT Freeport, a subsidiary of US-based Freeport McMoRan Inc, has demanded that the IUPK to contain similar fiscal and legal terms as those set under the COW to help ensure its long-term investment stability, a request turned down by the government, thus triggering the current dispute. The company had threatened to go to international arbitration if mutual resolution could not be reached with the government. (*)