TEMPO.CO, Jakarta - Recent news coming out of Phoenix, Arizona in the United States, where giant mining company Freeport-McMoRan is headquartered, prompted the Indonesian media to seek out Energy and Mineral Resources Minister Sudirman Said for confirmation. In a press release, Freeport's Chairman James R. Moffett announces that the company has obtained assurances from the government that its operations will continue beyond 2021.
This was confusing since Government Regulation No. 77/2014 states that such extensions can only be approved within two years before expiration. Rizal Ramli, coordinating minister for maritime affairs, immediately picked up on the discrepancy, accusing Sudirman of siding with Freeport. Last week, Sudirman denied reports that Freeport's contract extension had been approved. "There have been no words to indicate to indicate the contract has been extended," Sudirman told journalists.
How do you comment on reports that Freeport's contract has been extended?
Let me be brief. One, the agreement between Freeport and the government is a strategic agreement based on mutual respect, both by Freeport as the operator and the government as the regulator. Two, I've sent Freeport a letter with a proposal in line with the President's instructions, citing there are no legal or political risks involved. No law has been violated. But this is just a preparation for talks on Freeport's long-term investment. Three, to those people who don't understand, please stop speculating on the contract extension.
So there's no contract extension?
There has been no decision on the extension. They can request an extension and we will respond according to the existing regulations.
Isn't there a plan to revise the rules regarding extensions, making it 10 years before the contract expires.
There's no such thing.
So the request must still be submitted two years before the contract's expiration?
If the law on mining is revised, we will go along with it. But there's nothing about changing (the time for submission) from two to 10 years. (In so doing) we violate nothing.
In other words, the request for Freeport's contract extension must still be done in 2019?
Freeport can request for a contract extension after the law has been revised. When? That depends on the contract's expiration. Meanwhile, we ask that Freeport continue with its investments.
But they need legal certainty.
That's why we wrote the letter. We're urging investors already in the country to continue investing, and those outside (the country) to invest in the country. Which is why we said we would restructure regulations in preparation for long-term investments.
What would be the ideal time to request a contract extension: two years, five or ten years before the contract expires?
Billion-dollar investments must be planned way ahead of time. If only two years are given before the contract expires, well, that could be problematic. That's why we will revise the rules so they make sense. And I think everyone who invests will understand the advantage of this.
Is Government Regulation No. 77/2014 revised yet?
There's been a suggestion that it be revised. But it should be part of a deregulation package, not just for Freeport.
Will it be done this month?
I don't know. (*)
