PT Freeport awaits new regulation before resuming export
Thursday, April 6 2017 - 02:22 AM WIB
This was said by PT Freeport Spokesman Riza Pratama on Wednesday as quoted by Bisnis Indonesia daily. ?We?re still waiting for the finalization (of the new regulation) so that we can immediately resume export,? he said, but did not provide further details.
Secretary General of the ministry Teguh Pamudji said on Tuesday that following rounds of negotiations between the government and PT Freeport, both sides have agreed for the issuance by the ministry of a temporary special mining business license (temporary IUPK) for the company to allow it to resume export of copper concentrates, which has been suspended since January of this year. Teguh said that the minister will issue a new ministerial regulation as a legal basis for the new policy. He, however, did not say when the new regulation will be issued.
Teguh said that the temporary IUPK is a short-term solution to allow PT Freeport resume export of copper concentrates amid ongoing negotiations to resolve dispute between the company and the government.
He explained that while PT Freeport operates under the temporary IUPK permit status, the government will still honor the company?s existing mining contract of work (COW), meaning that legal and fiscal terms set under the COW regime remain in place.
The government introduced in January of this year a new regulation (replacing a 2014 regulation which banned export of mineral concentrates including copper concentrates produced by miners such as PT Freeport starting January 11 of this year) allowing miners to continue export of the concentrates for another five years but under certain conditions including converting their mining permit status form COW into IUPK, commitment to develop domestic smelter, and pay export duty.
While PT Freeport has agreed to convert into IUPK, the company demanded the IUPK to contain similar fiscal and legal terms as set in the COW including a nailed-down tax system instead of tax system based on prevailing regulations, to help ensure its investment stability. The request has been turned down by the government, thus triggering dispute between the two. PT Freeport?s parent, US-based Freeport McMoRan Inc, has previously threatened to go to international arbitration if no mutual agreement can be reached within six months from February.
PT Freeport, which operates the giant Grasberg mine in Papua Province, has been forced to partially suspend production activities since February as the company could no longer export copper concentrates due to the lingering dispute with the government, causing contractors to lay off their workers.
Meanwhile, Director General of Mineral and Coal at the ministry Bambang Gatot Ariyono said that with the issuance of the temporary IUPK, PT Freeport can now resume export of copper concentrates with a volume in accordance with the export recommendation letter issued by the ministry in February. According to the letter, PT Freeport is given a quota to export 1.11 million tons of copper concentrates until February 18, 2018. PT Freeport will have to apply for export permit from the Ministry of Trade after obtaining the export recommendation letter. (*)