Jakarta, Jubi – The Indonesian government will extend the operating license of PT. Freeport Indonesia in Papua mining area for the next 20 years.
The head of Public Communication at the Ministry of Energy and Mineral Resources, Dadan Kusdiana, said on Wednesday (10/6/2015) said the government made up decision in response to Freeport’s approval in accelerating the Contract of Work (KK) adjustment into Production Operation Special Mining Permit (IUPK) before the closure of contract in 2021.
“Through the adjustment of KK into IUPK, Freeport’s Operation Permit could be extended for 20 years,” he revealed the result of meeting between the Minister of Energy and Mineral Resources, Sudirman Said and Freeport McMoran CEO, James R Moffet and Freeport Indonesia CEO Maroef Syamsudin.
If IUPK acceleration could be applied in 2015, with 20 years extended, Freeport’s contract will expire in 2035. According to Dadan, the government is giving consideration to extend the operating license to Freeport after 2021 due to the giant US Company was in need to know about the decision before doing the investment. Freeport plans to invest 17.3 billion US dollars in which up to US 15 billion allocated for underground mines and infrastructure and US 2.3 billion for smelter. The investment that planned to be launched from 2015 is projected to gain return after the closure of Freeport’s contract in 2021. Dadan said the acceleration of management adjustment is a breakthrough in Law without violating the Law No.4/2009 on Mineral and Coal Mining operations that mentioned the extension of operating license could be filed two years before the closure of contract.
He further said the Article 169b of Mining Law said all KK must be adjusted into IUPK. Reffering to Mining Law, Freeport’s contract will expire in 2021 and could only apply for renewal in 2019.
On the other hand, Freeport need assurance about the extension of operating license for return of investment. For the reason, the Ministry of Energy and Mineral Resources proposed the acceleration of KK adjustment into IUPK before 2021. “On today meeting, Freeport agreed to adjust KK into IUPK,” said Dadan.
He added, IUPK could allow the government to revoke the permit at anytime. “If referred to KK, the investor is equal to the State, while referring to IUPK, we could revoke the permit at anytime,” he said.
Meanwhile, Maroed Syamsudin said for the company the assurance on the investment is important. “(KK adjustment into IUPK) it is a breakthrough. With this assurance, we won’t hesitate for investment,” he said.
Further he said Freeport would be subject to the rules and regulations related to the consequences of adjustment of KK into IUPK. (*/rom)