Govt-Freeport to sign MoU, stuck in detail

JAKARTA. Ahead of the weeklong Idul Fitri holiday and while public attention remains on the election results, the Energy and Mineral Resources Ministry’s Directorate General for Minerals and Coal and copper giant PT Freeport Indonesia are pushing hard to reach a deal in the renegotiation of the company’s mining contract.

The directorate general and Freeport is expecting to sign a memorandum of understanding (MoU), which will be used to amend the latter’s contract of work, on Friday, according to director general R. Sukhyar. The government is struggling to renegotiate a number of current mining contracts of work to bring them in line with the 2009 Mining Law.

Under the MoU, Freeport will provide $115 million surety bonds to show its commitment to building a smelter and pay reduced export duties and higher royalties. Freeport is also seeking assurances that it will be able to continue its operation after its contract expires in 2021.

A meeting with Freeport president director Rozik Soetjipto began on Friday morning. However, until Friday noon, the two sides seem to remain in stalemate.

“We won’t sign it [MoU] as the PMK (finance ministry decree) has not been issued,” Rozik said.

The decree is related to the government’s plan to reduce export duties paid by mining companies planning to export semi-finished mineral products. Since Jan. 12, the government has banned all mineral ore exports but allows semi-finished products, such as concentrates, to continue be exported until 2017 as long as the companies pay export duties of 20 to 60 percent. (rcf)