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BPK Releases Freeport Indonesia Audit Report
Freeport mine in Papua, Indonesia.
Tuesday, 03 October, 2017 | 15:48 WIB
BPK Releases Freeport Indonesia Audit Report

TEMPO.CO, Jakarta - The Supreme Audit Agency (BPK) has recently completed its audit on Freeport Indonesia. The report was included in the biannual summary of findings for the first semester of 2017 (IHPS I/2017).

The report issued on Tuesday, October 3, suggested that the mineral mining management of Freeport Indonesia has not been completely implemented according to the applicable provision that guarantees to achieve a sustainable and environmentally friendly natural resource utilization for the welfare of Indonesian citizens.

Read: Sri Mulyani Warns Freeport Indonesia over Contract Negotiation

 

The issues that need to be highlighted are the potential loss of an increase in state income through Freeport Indonesia’s dividends and the potential loss of the government to play its role in deciding the American mining giant’s strategic management.

The second issue is the fixed fee payment, royalty and added royalties of Freeport Indonesia using the tariff mentioned in the contract of work (CoW), which is lower and not adjusted to the current validated tariff. This has caused the loss of potential of Indonesia’s non-tax state revenue throughout 2009-2015 estimated to be valued at US$445.96 million.

The third issue is Freeport Indonesia’s tailings and mining waste management that is not up to the standards of Indonesian environmental regulations and the fact that its wastes have reached sea areas.

Based on the three issues above, a final deal was produced between the Indonesian Government and Freeport Indonesia; 1) 51 percent divestment, 2) Freeport Indonesia will operate under a special mining business permit and not under a contract of work, 3) Freeport Indonesia agrees to establish a smelter that will be complete by 2022.

BISNIS.COM



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