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Freeport insists on nail down fiscal policy

Tuesday, 14 February 2017 | Agus Triyono, Pratama Guitarra

JAKARTA. PT Freeport Indonesia’s status becomes more confusing. Last week, Ministry of Energy and Mineral Resources (ESDM) claimed that the status of Freeport Indonesia and Amman Mineral Nusa Tenggara have been converted to the special mining license (IUPK) at their own requests (KONTAN, Saturday 11 February).

However, Freeport Indonesia stated that company cannot accept the conversion of its status from contract of work (CoW) to IUPK, on the grounds that there has been no certainty on Freeport Indonesia’s operations until 2041, as well as on the nail down fiscal policy.

The Spokesperson of Freeport Indonesia Riza Pratama said, Freeport will convert its status to IUPK subject to the investment stability agreement and the same level of legal and fiscal certainties enumerated under its CoW. “This is essential for the Freeport’s investment plan in the long term,” he told KONTAN, Monday (13/2).

To date, Freeport decided to not convert its status to IUPK due to the absence of the agreement. Nevertheless, Freeport claims to continue partnering with the government to reach the agreement.

Freeport also has yet to file for export quota. As the consequence, the company has paused the production of underground mining since 10 February. “We have stopped producing concentrates,” he added. However, Riza still does not have the data related to the current amount of concentrates in the stock pile.

Secretary of Industrial Relations of All Indonesia Labors Union (SPSI) at Freeport Tri Puspita said that the employees are still waiting for the decision of Freeport Indonesia’s management on the operational of the company. "Currently, we still come to work, but not doing anything. We are still waiting for the management’s decision, whether to temporary layoff (the employees),” Tri Puspita said, Monday (13/2).

Director General of Mineral and Mining at the Ministry of ESDM Bambang Gatot Ariyono claimed to have not officially received the objection from Freeport about the status conversion to IUPK.

Whereas, in the last week, Bambang said that the Minister of ESDM Ignasius Jonan had signed the Minister of ESDM Decree on the Status Conversion of Freeports’ Contract of Work to IUPK. The conversion of the status was requested by the company.

The observer of law on natural resources at Tarumanegara University Ahmad Redi said that a contract cannot be changed unilaterally. In this case, a contract ends if the related parties agreed to do so, or it is cancelled by the court. Also, a contract will end if it has reached the expiration date.

“These are in line with the Article 1266 of Civil Code. These also have confirmed with the Article 169 point a Law on Mineral and Coal that stipulates that the CoW will apply until the expiration date,” Redi said.

According to Redi, for Freeport, the sudden status conversion is a government’s mistake. However, Freeport also has trumped up the demands for special treatments in terms taxation and operations. Redi added, the government is supposed to not extend the operations of Freeport after 2021.

“However, our government is weak under the control of Freeport. (The government) does not have a clear stance on the national’s interests,” he added. (Muhammad Farid/Translator)

 

Reporter: Agus Triyono, Pratama Guitarra
Editor: Sanny Cicilia
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