Government to issue temporary license for PT Freeport
Tuesday, January 31 2017 - 01:31 AM WIB
Courtesy of Freeport
The government has decided to issue a temporary IUPK special mining business license for gold and copper giant PT Freeport Indonesia to allow the company to immediately resume export of copper concentrates.
Minister of Energy and Mineral Resources Ignasius Jonan said on Monday that the temporary IUPK is needed as the process for the conversion of mining contract of work (or CoW) into permanent IUPK could take about 3-6 months to complete, especially as the company has demanded for certain conditions including a nailed down tax system, and extension of the mining license to 2041. He said that delaying the company?s export for such a long time could hurt the local economy of Papua where PT Freeport operates and create unemployment.
?We?ll issue a temporary IUPK as a basis to issue export recommendation (for PT Freeport). Probably in 1-2 days, the temporary IUPK will be issued,? he told reporters.
The government recently introduced a new Government Regulation No 1/2017, allowing mineral mining companies to continue export of mineral concentrates including copper concentrates produced by miners such as PT Freeport. The previous regulation banned the export of mineral concentrates starting January 12. Miners, however, can continue export of mineral concentrates on certain conditions including converting their mining permit status from CoW to IUPK, make commitment to develop domestic smelter, and pay export duty.
PT Freeport, a subsidiary of US-based Freeport McMoRan Copper & Gold Inc, on January 14 applied with the Ministry of Energy and Mineral Resources to convert its CoW into IUPK, but demanded certain conditions for investment stability such as a nailed down tax rate (IUPK follows prevailing regulations, not nailed down system), and extension of the IUPK to 2041 (the company?s current mining contract is set to expire in 2021).
PT Freeport earlier said that delaying the company?s export for three months would force the company to trim down production and lead to layoff.
Freeport McMoRan said in a recent statement that it has set higher sales volume target for this year from its Indonesian operations run by subsidiary PT Freeport Indonesia, but this would among others depend on whether the latter company could obtain the necessary export permit from the Indonesian government in February.
Meanwhile, observers said that giving a temporary IUPK license for PT Freeport is in breach of the 2009 Mining Law, which does not acknowledged such temporary permit. The move is also seen as showing the government of being weak to PT Freeport. (*)