Govt' to Change Freeport Contracts to Special Mining Permits  

TEMPO.CO, Jakarta - The government will change Freeport's exploration and exploitation agreement from mining contracts [locally known as "Kontrak Karya"] to Special Mining Permits (IUPK) after 2021, said R. Sukhayar, Director General of Mineral and Coal at the Energy and Mineral Resources Ministry (ESDM) on Friday, July 25, 2014.

"The change will be enforced to comply with Law No. 4/2009 on Mineral and Coal that restricts mineral concession to be governed by mining contracts," Sukhayar said.

The most fundamental difference between the mining contract and the special mining permit, Sukhayar explained, lies on the agreement process of mineral exploration and exploitation. In a mining contract, the agreement clauses are decided by parties involved in mining projects. In a special mining permit, the government will have a full authority to regulate the clauses and to provice permit for miners.

Sukhayar revealed that the government is still in the renegotiation process with Freeport, and both have yet to sign any agreement. The government has raised the amount of royalty from one percent to 3.75 percent for gold mining produce, and from one percent to three percent for silver. As for copper, the government has asked for a four percent royalty the previous one percent.

RAYMUNDUS RIKANG R.W.