Government to extend PT Freeport?s contract to 2031

Petromindo

The government indicates it?s willing to extend gold and copper giant PT Freeport Indonesia?s current mining contract by another 10 years on a number of conditions including agreeing to convert its current contract of work (COW) mining permit status to special mining business license (IUPK).

?(PT Freeport?s) mining operation until 2031 is firm, most likely,? said Secretary General of the Ministry of Energy and Mineral Resources Teguh Pamudji said over the weekend.

PT Freeport?s current contract is set to expire in 2021. The company has previously said it wanted to for an extension of the contract by another 20 years, or extended until 2041 as it will invest billions of dollars in underground mine in Papua and domestic smelter project. The company, a subsidiary of US Freeport McMoRan Inc, wants to obtain certainty over the proposed contract extension prior to making the new investment.

The contract extension issue is among of the issues currently being negotiated by the company and the government, a process expected to be concluded in October of this year. Other issues include demand for PT Freeport to convert its permit status to IUPK as part of conditions for continuation of export of copper concentrates, to build domestic smelter, and to divest up to 51 percent stake to Indonesian investors.

PT Freeport has agreed to convert into IUPK on the condition that it carries similar legal and fiscal terms as set out under the COW to help ensure stability of its long-term investment, a request which has been previously turned down by the government, thus triggering dispute between the two, and subsequently led to the ongoing negotiations that started last month. (*)