State revenue from Freeport to increase: minister

FREEPORT - Indonesian Finance Minister Sri Mulyani Indrawati has ascertained that the country's revenue from PT Freeport Indonesia (PTFI) could be increased after the mining giant changes its contract of work into a special mining license (IUPK).

"The state revenue from PTFI's operations could be higher than the current revenue under the contract of work. This is in accordance with Article 169 (c) of Law No. 4 of 2009 on coal and mineral," Indrawati informed the press here, Tuesday (8/29).

The former managing director of World Bank did not elaborate further but remarked that the increased revenue will be included in an appendix of the IUPK.

The appendixes will stipulate PTFI's obligations to contribute to the state revenue through royalties, income tax, value-added tax, property tax, regional tax, and revenue sharing between the central and local administrations.

"We will stipulate these in a government regulation not only for PTFI but also for all mining firms under the IUPK in Indonesia and will mention various components in the state revenue that must be paid," Indrawati emphasized.

The Indonesian government and PTFI have been in the final stage of negotiation on the company's mining contract in the country.

The negotiation has discussed the divestment of 51 percent of PTFI's shares, establishment of a smelter within five years since the issuance of the IUPK, and agreement to maintain the amount of the state revenue from the operations.

"This is not an easy negotiation, as we are very strict in protecting Indonesia's interests. These three points are non-negotiable," Indrawati added.