TEMPO.CO, Jakarta - Freeport Indonesia plans to take the Indonesian government to arbitration to settle the dispute over its mining contract in the country.
President and CEO of Freeport-McMoRan Inc Richard C. Adkerson said the company is at an impasse with the government, and has sent a notification to the Energy and Mineral Resources Minister Ignasius Jonan last Friday, Feb 17.
The letter describes the differing views between the US miner and the government regarding its contracts (COW) and the special mining permit (IUPK).
Adkerson said that if no agreement is reached after 120 days since the notification, the two sides have the rights to settle the dispute with the arbitration court.
"At the end of that period if this dispute is not resolved we reserve the right at that time to commence arbitration," Adkerson told the press at the Jakarta Fairmont Hotel on Monday, February 20.
Freeport insisted that it will not change its contracts from COW to IUPK without fiscal and legal certainty. Adkerson referred to Law No.4/2009 that states a COW can remain in force. He wishes to apply IUPK without forfeiting the COW.
Freeport cannot export without terminating the COW. But changes in operations mandate Freeport to divest 51 percent of its shares to the government. Another term is to commit in building a smelting facility in five years.
Converting it status to IUPK also mandates Freeport to abide by prevailing tax rules, whilst the COW provided the permit provides a nail-down policy.
VINDRY FLORENTIN
