Freeport Yet to Agree on Switch Over from Contract of Work
13 February 2017 08:02 WIB
TEMPO.CO, Jakarta - Riza Pratama, spokesman of PT Freeport Indonesia, a local unit of U.S. based mining company Freeport-McMoRan Inc., said that the company has not agreed to switch over from its contract of work (CoW) to temporary special mining permit (IUPK) issued by the government. “We have yet to agree because there is no assurance of a safe investing environment,” Riza told Tempo yesterday.
Freeport has halted its mineral exports due to the lack of agreement on the switchover. Freeport-McMoRan Inc. spokesman Eric Kinneberg told Reuters last weekend that the company has halted concentrate exports since January 12. The mining company said it will continue to negotiate with the Indonesian government, noting that new mining permit provisions should be equal to that of its current CoW.
Kinneberg said the agreement was critical for Freeport Indonesia’s long-term investment. He said that new mining permit requires Freeport to pay taxes and royalty. The company is also required to dispose of its 51 percent stake to the Indonesian government, an increase from the previous requirement of 30 percent. Freeport has only divested its 9.36 percent stake so far.
Freeport made the statement shortly after the Energy and Mineral Resources Ministry announced that it has issued temporary IUPK to Freeport, which would allow the mining company to obtain a mineral concentrate export permit. The government has banned Freeport from exporting concentrate before it built a smelting plant.
Freeport said the halt in concentrate exports would reduce the output Grasberg mine in Papua by around 70 million pounds of copper per month. The company had planned to lay off 30,000 workers in mid-February if denied export permit.
Earlier on Friday, director general for mineral and coal, the Energy and Mineral Resources Ministry, Bambang Gatot Ariyono said the ministry had approved requests of Freeport Indonesia and PT Amman Mineral Nusa Tenggara (AMNT) to switch over from CoW to special mining permit for mineral concentrate production.
GHOIDA RAHMAH | ABDUL MALIK | VINDRY FLORENTIN | FERY FIRMANSYAH