TEMPO.CO, Jakarta - The Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said that the government is ready to take over the management of PT Freeport Indonesia through a state-owned mining company. “The government can; we have Inalum,” he said on February 26, 2017.
The government will take over Freeport mine if it wins an international arbitration. “Or [taken over by] a consortium,” he said.
According to Luhut, PT Indonesia Asahan Aluminium (Inalum) is capable of taking over Freeport management. Inalum is a state-owned enterprise (SOE) engaged in aluminum smelting in Asahan, North Sumatra. Inalum is expected to lead state-owned mining companies under a mining SOE holding company.
At present, the government is still negotiating with PT Freeport Indonesia over the switch over from Contract of Work (CoW) to a special mining permit (IUPK).
Read: Freeport Asks Govt to Respect Contract of Work
Richard Adkerson, the chief executive officer of Freeport-McMoRan, the parent company of PT Freeport Indonesia, has set a 120-day deadline for the government to resolve Freeport row. Failing that, Freeport will take the case to international arbitration.
According to Adkerson, the government has violated provisions of the CoW signed in 1991 and Law No. 4/2009 on Mineral and Coal Mining. Moreover, Freeport has declined to agree to terms on the IUPK, citing assurance of its investment in underground mining worth US$15 billion effective until 2041. The mining company also refused to dispose of its 51 percent stake.
Gus Irawan Pasaribu, a member of Energy Commission of the House of Representatives (DPR), has supported Inalum to take over the management of Freeport mine. According to him, Inalum has performed better without the involvement of foreign parties. Inalum was established by the Indonesian government in cooperation with Japan-based Nippon Asahan Aluminium Co. in 1976. The government later acquired the full interest in the company in late 2013.
His colleague in the DPR’s Energy Commission, Kurtubi, said he preferred state-owned PT Aneka Tambang (Antam) to take over Freeport management. “But both Antam and Inalum will need time to operate Freeport’s giant mine. Nevertheless, they are capable,” he said.
Kurtubi said that Indonesia’s natural resources ought to be managed by state-owned enterprises. “The Contract of Work scheme adopted in the national mining sector is harming the country,” Kurtubi said.
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