Govt agrees to revise Freeport?s contract
Tuesday, May 30 2006 - 02:07 AM WIB
?Intention to change the (firm?s) royalty ? if that?s what we want ? we don?t find it a problem. We agree on it. But, if we want to do it, changes should be made, that is on the government regulation governing the matter,? the paper quoted Minister of Energy and Mineral Resources Purnomo Yusgiantoro as saying on Monday during a hearing with the House of Representatives? task force on Freeport.
According to the newspaper, one of the regulations is the Government Regulation No. 20/1994 which allows a 100 percent ownership by foreign mining firms in Indonesia. This waives Freeport?s contractual obligation to divest its shares to Indonesia.
Purnomo said if the audit by the government?s team concluded that the royalty payable by the firm to the government should be increased, his office would demand the increase.
He, however, noted state revenue, including royalty, was not part his office?s authority. He thus needed a decree from the Ministry of Finance as a legal umbrella for his office to demand the increase in royalties from Freeport.
Freeport, a subsidiary of American mining giant Freeport McMoRan Copper & Gold, has pressured to close its operation by several parties, including top politicians and Papuan leaders, who claim that firm had caused environmental damage and had not given enough revenue to the government and the local community.
Purnomo said during the meeting that a closure of Freeport?s operation would lead to the dismissal of 19,000 people now working with the company. It will also impact on 450 national contractors who rely on Freeport and the government will lose a large potential revenue. Last year, the government received US$880 million in direct benefits and $740 million in indirect benefits. (*)