Minister tells Freeport not to push on contract extension
Thursday, August 4 2016 - 01:18 AM WIB
In his first remarks on Freeport since his appointment as Coordinating Maritime Affairs Minister late last month, Luhut Pandjaitan, a trusted advisor of Indonesia's President Joko Widodo, said the government was "evaluating everything".
"Freeport shouldn't push us. We are a sovereign state and we know what we are doing," Luhut told reporters.
Freeport through its subsidiary PT Freeport Indonesia operates the Grasberg mine. The company is seeking to quickly extend its mining contract, which is set to expire in 2021, as it plans multi-billion dollar investment.
Freeport wants assurances on a contract extension before investing $18 billion to expand its operations, including underground, but under existing laws cannot legally begin talks on a contract extension until 2019.
"We will also look carefully at what we can do without breaking the law," said Luhut.
Indonesia's existing 2009 mining law is expected to be revised by the House of Representatives this year.
Freeport, which runs one of the world's biggest copper mines in Indonesia's easternmost province of Papua and is one of Jakarta's biggest taxpayers, is also waiting on an extension of its copper concentrates export permit, which is due to expire on August 8.
Luhut said he planned to discuss the export permit with newly appointed Energy and Mineral Resources Minister Arcandra Tahar, and hoped to be able to provide more details on this and Freeport's contract in one or two weeks.
Freeport Indonesia spokesman Riza Pratama said the company was waiting for the government to provide "legal and fiscal certainty" for it to continue operations through to 2041, and was "optimistic" it would be granted a new export permit.
Freeport usually produces about 220,000 tons of copper ore a day and a prolonged stoppage in shipments would hit the company's profits and deny Jakarta desperately needed revenue.
The U.S.-based miner and the government are also at loggerheads over a government drive to increase revenues from its minerals, after Indonesia ruled that from Jan. 12, 2017 copper concentrate exports will be banned.
Freeport currently processes only about a third of its copper concentrate in Indonesia.
Freeport CEO Richard Adkerson said last week he did not believe that Indonesia would go through with the ban on copper concentrate exports, as it would harm the country's economy.
He also said Freeport had received assurances that it would get an export permit by August 8, while discussions on extending the miner's long-term contract had been "constructive". (*)