Freeport Agrees Terms for Mining Contract Extension

TEMPO.CO, Jakarta - The government and PT Freeport have agreed several terms in the renegotiation of Freeport's mining contract extension. There are three terms that have been agreed, according to Mineral and Coal Director, Gen. R. Sukyar, which are: the area of mining region, increased royalty rate to 3.75 percent, and smelter development plans. "The negotiation is still underway," he said, Friday, April 11.

Although they have agreed a number of points, he said, the organization still has not agreed to divest its stake. "In regard to divesting, we have not made a deal," he said.

He explained that the government has urged the American mining company to divest 30 percent of its stake to Indonesia. The figure is lower than what was required in Regulation Number 4 of 2009 regarding the obligation to divest 51 percent of stake.

According to Sukyar, the request to merely divest 30 percent is because Freeport still requires the underground mining investment in Grasberg, Papua. "The government requests 30 percent. 51 percent is the maximum figure depending on investments."

Previously, he said, the government will extend the contract with Freeport that will expire in 2021 if the company agrees to divest 30 percent of its stake. Up to this moment, the Freeport management has not confirmed whether they agree or not.

ALI NY | PINGIT ARIA