Govt suffers loss of $2.7m per day due to Freeport's mine stoppage

The government could suffer financial loss of about US$2.7 million a day due to the stoppage of Freeport Indonesia's gold and copper mines in Papua, according to Simon Felix Sembiring the Director General of Coal and Geothermal at the Ministry of Energy and Mineral Resources.

"The state receipt from Freeport in the form of taxes and non-taxes reached a total of US$1 billion in 2005. Based on the 2005 income , the loss suffered by the government from the stoppage of Freeport's mine operation could reach US$2.7 million a day," he was quoted as saying Bisnis Indonesia on Friday.

Sembiring said that the government would try hard to end the local people's protests so that the mining company would soon be able to resume its operation.

The tax and royalties paid by Freeport which produces about 12.5 million tons of copper concentrate including gold ores a year, rose significantly to about US$1 billion in 2005 from about $260 million in 2004 due to the increase in the copper and gold prices.

Despite the sharp increase in the tax and royalty payment, Vice President Jusuf M. Kalla said recently that the payment was still too small. Some members of the House of Representatives have also called for the review of the company's contract to ensure that the government would receive fair payment from Freeport operation.

Sembiring said that an inter-government team was studying the contract as the follow-up of the House's demand for the review the company's existing contracts. (*)