Minister hints at renegotiation of Freeport contract
Monday, May 15 2006 - 02:42 AM WIB
The renegotiation is likely to begin in the next two months after the government finalizes an evaluation of the firm?s operation and its contributions to the local community, Energy and Mineral Resource Minister Purnomo Yusgiantoro said recently.
?We should see whether there are some points in the (working) contract that have not been met by Freeport. The government may require Freeport to sit down with us to renegotiate the contract, probably in the next two months,? Purnomo said.
He reiterated that the government was currently evaluating the company?s overall production level and mining process, community development programs, environmental management, contributions to the state and security affairs.
The evaluation will take around two months, after which the government will evaluate in detail the company?s working contract, with input from the Papua administration.
?The contract should be reviewed since there is no clause requiring the firm to have community development programs. It is just a one-part commitment where Freeport pledges to allocate one percent of its gross profit for these programs,? Purnomo said.
Papuans have long requested what they deem to be a fair split of the profits earned by Freeport from mining gold and copper at its Grasberg mine, located in the mountains near Timika regency. Grasberg is the world?s largest gold and second largest copper mine.
Papuans also have urged the government and Freeport to show a greater commitment to environmental protection, as well as to boosting economic development in the country?s easternmost province.
?The government will meet with local administrations to learn whether there are some points in the contract that have not been fulfilled by Freeport, and other issues that need to be included in the contract,? Purnomo said.
Freeport is currently under the spotlight over allegations that is has polluted the environment and paid millions of dollars in illegal fees to the Indonesian Military for securing the company?s operations in Papua.
Just recently, a House of Representatives-sanctioned team confirmed earlier findings that the tailing system used by Freeport at its mine has caused severe damage to the environment by simply disposing of hazardous waste in nearby streams.
Environmental group Greenomics Indonesia estimated that repairing the damage to the rivers would cost the company around US$7.5 billion based on current international standards.
Freeport has repeatedly said the company has complied with all of the country?s environmental regulations. (*)