Tuesday, 19 November 2019

Expert Highlights Problems with Latest Freeport Deal

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  • Freeport. REUTERS/Stringer

    Freeport. REUTERS/Stringer

    TEMPO.CO, Jakarta - The Indonesian government and American mining giant Freeport Indonesia finally agreed today on Tuesday, August 29. Despite this, legal mining expert of Universitas Tarumanegara Ahmad Redi argues that the deal has its flaws. 

    The first is regarding Freeport’s special mining business permit (IUPK) that he considers is not in accordance with the mineral and coal law (UU Minerba). “According to the law, an IUPK can be given after the state reserve territory has been determined and approved by the House of Representatives. The IUPK itself is prioritized to be given to State Owned Enterprises,” Redi explained.

    Read: Govt Prepares Scheme for State Income from Freeport

    He also questions Freeport’s commitment in the deal to construct a domestic smelter within the five-year limit after the IUPK is issued. Redi argues that Freeport had long been promising to build one but is yet to be realized. 

    He also claims that buying divested shares during the end of a working contract (KK) is a policy that is disadvantageous for Indonesia. "Because without buying out Freeport's divestments in 2021, Freeport could already be owned by the government," he said.

    Read: Minister Luhut Dubs US being Arrogant over Freeport

    Freeport's stock divestment deal is stated in the extended working contract of 1991, where the company was initially obliged to divest 51 percent of its shares in 2011. But Redi regrets that Freeport has yet to realize the deal in the contract up until this moment. 

    “This deal is reinforcing Freeport Indonesia in exploiting Indonesia’s natural resources,” Redi stated.