Wednesday, 20 November 2019

Government Grants Special Mining License for Freeport

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  • Freeport mine in Papua, Indonesia.

    Freeport mine in Papua, Indonesia.

    TEMPO.CO, Jakarta - The government has issued a special mining license (IUPK) for PT Freeport Indonesia that will be valid until October 2017. However, the license issuance does not automatically terminate Freeport's Contract of Works.

    Teguh Pamudji, Secretary General of the Energy and Mineral Resources Ministry, said that the special mining license has been granted since February 2017. The decision to grant the temporary license was a result of negotiations between the government and Freeport.

    "Freeport has gained a special mining license that will last for 8 months to accommodate its exports," Teguh said during a press conference at his office in Jakarta on Tuesday, April 4, 2017.

    With such a license, Freeport has obtained a recommendation allowing the company to export concentrates with an obligation to pay export duties. The recommendation is valid for a year and will be evaluated once in six months. The export quota for Freeport was set at 1.1 million tons.

    Teguh said that the government and Freeport were in negotiations to discuss short-term and long-term agreements. The short-term agreement covers legal basis and business certainty for Freeport. Both sides also clarify contractual relationships following the issuance of Government Regulation No. 1/2017.

    In addition, the long-term agreement covers provisions related to investment stability, Freeport's operation sustainability, divestment, and smelter construction. The next negotiation will commence next week that will involve several ministries and institutions, including the Energy and Mineral Resources Ministry, the Finance Ministry, the Fiscal Policy Agency, the Home Affairs Ministry, the Investment Coordinating Board (BKPM), and the Attorney General's Office.

    Bambang Gatot, director general of mineral and coal at the Energy and Mineral Resources Ministry, said that the negotiation will also involve the Papua administration and local residents.

    Although Freeport has obtained the IUPK, Teguh explained that Freeport is still entitled to its rights set forth in the Contract of Works.

    "Freeport will operate under the IUPK until October. However, we still honor the CoW," Bambang said.

    Under the Government Regulation No. 1/2017, CoW holders are required to shift to the IUPK in order to be allowed to export concentrates. Such a change will terminate the CoW.

    Teguh said that the government is currently drafting a regulation related to the temporary mining license. However, Teguh asserted that the temporary mining license will only valid during the negotiation period.