TEMPO.CO, Jakarta - The Indonesian government is planning to extend Freeport Indonesia's licence to operate in Papua for another 20 years. The Head of Public Relations for the Ministry of Energy and Mineral Resources, Dadan Kusdiana, said that the final say will depend on whether Freeport manages to change its' working contract (KK) into a special mining license (IUPK) before its' original contract expires in 2021.
"By turning the KK into an IUPK, Freeport could extend their operations by 20 years," said Dadan, who explained the details of the meeting between the Minister for Energy and Mineral Resources, Sudirman Said, and Freeport Indonesia on June 10, 2015.
Dadan added that should Freeport's request for an IUPK is granted, then it would be allowed to operate in Papua until 2035.
It is known that the meeting was attended by Freeport McMoran's Chairman of the Board, James R Moffett, as well as Freeport Indonesia's Executive Director, Maroef Syamsuddin.
According to Dadan, the decision to allow Freeport to operate beyond 2021 was reached because the company requires some degree of certainty before it manages to invest in Indonesia.
It is also known that Freeport plans to invest US$17,3 billion - consisting of US$15 billion for the development of underground mines and infrastructure, and another US$2,3 billion for the construction of smelters. Freeport wants to operate beyond 2021 because its' could only expect a return of investment long after 2021.
Dadan explained that the acceleration of the permit conversion is a legal breakthrough that does not violate the terms set out in Law No. 4/2009 on Coal and Mineral Extraction, which said that the extension of permits could be submitted two years before the original contract expires.
According to Dadan, clause 169b of the law said that all KK will have to be converted into IUPK. By taking these clauses into consideration, Freeport could apply for an extension in 2019.
Maroef Syamsuddin said that it is important for companies to have assurances and certainty to their operations. "This really is a breakthrough. Now that we know for certain, we won't hesitate to invest," he said, before adding that Freeport will always adhere to the law in its' operations.
BISNIS.COM
