Jayapura , 7/4 ( Jubi ) -The Indonesian government is secretly renegotiating its contract with Freeport Indonesia and PT Vale Indonesia, according to a media report.
The government is likely to extend Freeport and Vale contracts to 20 years in accordance with the companies’ request, according to kontan.co.id. This means that Freeport’s contract would not end in 2021 but 2041. The contract with Vale is likely to expire in 2045.
The government is ready to agree with Freeport’s and Vale’s contract extension proposals, Director General of Minerals and Coal at the Ministry of Energy and Mineral Resources, R. Sukhyar, said on Saturday (5/4), according to Kontan.
“The companies are asking definite extensions as they have made large investments. It is the main point of our meeting,” Sukhyar as reported kontan.co.id .
Media reports said the negotiation between the Indonesian government and PT Freeport has not been completed. There have been rumors that the negotiation with Freeport would be used as a rallying point by presidential candidates.
Presidential candidate Joko Widodo refused to answer questions about the issue when he was campaigning in Jayapura.
“We’ll see after the presidential elections,” Jokowi said Saturday (5/4)
There has been agreement on some points in the negotiation between the government and Freeport, Freeport is now required to divest 30 percent of its shares, instead of 51 percent as required by Government Regulation ( PP ) No. 24 of 2012 because it has underground mining operations. PT. Vale Indonesia is obliged to sell 40% of its shares.
Regarding the underground mine, Vice President for Corporate Communications of PT Freeport Indonesia, Daisy Primayanti told Tabloid.Jubi.com that in 2013 Freeport did not pay dividends to all share holders including the main company of PTFI and the Government of Indonesia. It was resulted by several factors, including lower copper and gold sales due to low ore grades, disruptions at the mine, the decline in global commodity prices, and the use of cash flow to invest about 1 billion U.S. Dollars, to support the development of an underground mine in 2017 and will become the foundation of Freeport mining activities.
“The underground mining project will significantly cost investment around 15 billion U.S. Dollars over the remaining life of the mine. In addition the cash flow is also used to maintain the level of product sustainability this time, “Daisy explained.
She declined to comment on the reported extension of the contract. (Jubi/Victor Mambor/Tina)