Govt mulls renegotiating Freeport?s contract

The government is mulling renegotiating PT Freeport Indonesia ’s contract of work to follow up the result of the audit on the copper and gold company, Kompas Daily reported Tuesday.

 

Minister of Energy and Mineral Resources PurnomoYusgiantoro said in Jakarta Monday that the government had already told Freeport about the need to revise several points in the contract to comply with the result of the audit.  “In someway, Freeport has agreed, such as the need to revise the method used for calculating Freeport ’s royalty payment,” he said.

 

However, Purnomo said, the revision would possibly be conducted in stages.

 

The joint audit team involves several ministries, including the Energy and Mineral Resources Ministry, Finance Ministry, Environment Ministry, Coordinating Minister for Politics, Law and Security under the coordination of the Coordinating Minister for Economy. The team started to work in 2006.

 

The team conducted an audit on Freeport ’s production, the community development's funds, state revenue, security, and environmental management.

 

The government, Purnomo said, had to consider all of the impacts of the revision of the contract. “It might be not easy to revise the point related to fiscal requirement because the company has become a public company,” he said.

 

Separately, Director of Mineral and Coal Development Supervision at the Ministry of Energy and Mineral Resources Mangantar S. Marpaung said with regards royalty payment, the government has decided to ask Freeport to raise its royalty payment for gold to 3.5 percent of the market price from 1 percent at present.

 

This is in line with the Govenrmental Regulation No. 45/2003 on the government's non-tax revenue, Mangantar was quoted by Bisnis Indonesia as saying.

 

Aside from gold, the subsidiary of American mining giant Freeport McMoRan Copper & Gold produces copper at its Papua mines, for which the firm pays a 3 percent royalty to the government. (*)