Freeport ready to sue Indonesia’s government

JAKARTA. The negotiation between the Government of Indonesia through the Ministry of Energy and Mineral Resources with PT Freeport Indonesia has been deadlock. Various strategies have failed to subdue that American company.

Freeport insists on rejecting the status conversion from the Contract of Work (CoW) to the Special Mining License (IUPK). Even, according to a source of KONTAN, Freeport is considering filing the case to international arbitration court in The Hague, the Netherlands.

This case had led Chappy Hakim to resign from the position as the President Director of Freeport Indonesia. Chappy felt to have failed to find a solution for both sides.

Minister of ESDM Ignatius Jonan claimed to be undaunted of Freeport’s plan to file this case to the arbitration court. According to Jonan, this might offer a better solution for this case. “Instead of always using the layoff issue as an instrument to push the government,” said Jonan in a written statement, Saturday (18/2).

Jonan said that Freeport has rejected the status conversion from the CoW to the IUPK. In fact, the government has issued the IUPK, which would be in accordance with the provisions stipulated under the CoW. The issuance of this IUPK is stipulated under the Minister of ESDM Regulation No 15/2017 on the Procedure of Granting the Special Mining License (IUPK) of Production Operation as the Continuation of the Contract of Work Operation, which has just been released recently.

The Spokesperson of Freeport Indonesia Riza Pratama said, Freeport has rejected the status conversion to the IUPK, on the grounds that the status conversion is not accompanied with an agreement about investment stability in terms of law and fiscal aspects for Freeport. “We also have yet to agree on the export requirement, of which Freeport has to agree with the IUPK’s (agreements),” he told KONTAN, Sunday (19/2).

By accepting the IUPK, it means that the company has accepted the unilateral decision made by the government. In fact, Freeport did not agree with the decision.
He continued, the problem has become complicated, as it is related to many aspects, including the rules and contract, as well as other technical aspects.

The observer of natural resources law Ahmad Redi said that the government's position is in the weaker position, as the government defaults on its contracts by banning the export and forcing the status conversion to IUPK. However, the government might use the issue of Freeport’s failure to divest its shares and to build the smelter, as well as to comply with the Indonesia’s law,” Redi said.

(Muhammad Farid/Translator)