Minister "threatens" Freeport with heavy penalty

Minister of Mines and Energy Susilo Bambang Yudhoyono said on Thursday that the government would impose a heavy penalty on copper and gold mining company PT Feeport Indonesia and other mining companies if the government found significant contractual violations in their operations, Kompas reported.

Bambang said the measure aimed to create a fair and just business environment in the mining sector rather then troubling the business environment in the sector.

He earlier said the government would form a fact-finding team to probe the allegations that Freeport, which operates a huge copper and gold mine in Irian Jaya, had committed violations in terms of environment, divestment, local partnership and others.

"The fact-finding team will investigate if the allegations are true. The team should work fairly, transparently, independently and comprehensively," he said, warning that the government was likely to impose a heavy penalty on Freeport if it was found to neglect its contractual obligations.

Bambang said he agreed on the public's opinion that the governmental regulation No. 20/1994, which enables Freeport to avoid its divestment obligation, had been issued on the basis of corruption, collusion and nepotistic practices.

He said he would discuss with Coordinating Minister of Economy, Finance and Industry Kwik Kian Gie on plans to revoke the governmental regulation . (*)