REPUBLIKA.CO.ID, JAKARTA -- A senior minister said here on Friday that PT Freeport Indonesia has actually reneged on its obligations to build a smelter and divest up to 51 percent of its shares since 2009.
Until now the US mining company has never met the obligations, Coordinating Minister for Maritime Affairs Luhut Panjaitan said. "So what we ask now is what should actually been realized in 2009. There is nothing new. So, to me it is weird if they still would not want to meet them," he said at his office.
Luhut made the statement in response to Freeport McMoran's threat to cut the company's production and workforce up to around 30,000. He said it would not be so simple for a multinational company as big as Freeport to lay off workers. "Would a multinational company as big as that lay off workers?. It is not that simple. We must also honor what have been agreed upon. Looking back they should have divested 51 percent of its shares in 2009 but they had not. They should also have built a smelter but they had not," he said.
Freeport has asked for legal certainty and fiscal protection with regard to achieving an agreement between the company and the Indonesian government following the Indonesian government's decision to change the company's status from a working contract-based company to a Special Mining Business Permit (IUPK) holder.
Following the change Freeport must adhere to what the Indonesian government has decided in connection with prevailing tax regulation made by the government in line with the mandate of Ministerial Regulation Number 1 of 2017. Freeport has asked for meeting its tax obligation "naildown" or based upon the working contract as before.
According to Government Regulation Number 1, 2017 on coal and mineral mining business activities the government would only extend its permit for concentrate exports upon several conditions including changing the working contract into an IUP (Mining Business Permit) or IUPK to get recommendations for concentrate exports.
IUP and UIPK holders are also required to made a statement that they would build a smelter within five years. Once in six months the smelter development will be evaluated and the company concerned must meet minimally 90 percent of the development targets that have been set.
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