Energy Minister Ready to Face Freeport`s Possible Lawsuit

TEMPO.CO, Jakarta - The Indonesian government is ready to face US-based Freeport McMoran Inc.’s threat to reduce its local unit Freeport Indonesia's production and file a lawsuit for not being granted an extension of clearance to export concentrate.

Energy and Mineral Resources Minister Ignasius Jonan expressed that there will be no compromise over concentrate export extension. “The government has never barred export as long as the requirements are met. That is all,” he told Tempo yesterday in Jakarta.

Jonan said that Freeport has expressed its commitment to switch over its Contract of Work (CoW) to special mining permit (IUPK), which is among the requirements for mineral export extension under the Regulation of the Ministry of Energy No. 5/2016.

However, the company has yet to complete the application form to change its operation. Moreover, Freeport has yet to file for a proposal to build smelter(s) or report its smelter project development. Jonan said that if Freeport fails to build smelting plant(s) within five years, export extension commitment will be revoked. At present, the company has only managed to complete 13 percent of its smelter project.

Freeport McMoran CEO Richard Adkerson earlier threatened to reduce mining production. 

Adkerson is also mulling legal action against the Indonesian government. According to him, based on the CoW, Freeport Indonesia reserves the right to export copper concentrates without limitation or liability to pay excise on export.

Freeport has also proposed two conditions to the Indonesian government: assurance of legal and fiscal certainty as well as operational permit extension.

Freeport expects to extend its operational contract to 2041. Its current Contract of Work will expire in 2021.

ABDUL MALIK | ROBBY IRFANY