Freeport Must be Prepared to Renegotiate Contract
Wednesday, 10 , 2080 | 15:43 WIB

Tempo Interactive, Jakarta: Simon Sembiring, Director General of Minerals, Coal and Geothermal, has said that PT Freeport Indonesia cannot reject the renegotiation of its working contract with the government.

“If we ask for something, as long as it doesn't disrupt Freeport's contract with other parties or its loans, they must accept it,” he said last week.

According to Simon, Freeport's rejection can only be acceptable when renegotiation with the government disrupts its contracts with other parties.

“We've reported to the Coordinating Minister for the Economy because (this) is an inter-departmental affair,” he said.

As already reported, Freeport's audit result covers production, environment, community development, state revenue and security.

The result of the audit into Freeport, first, changes the term of royalty payment calculations from the previous three months to after shipping.

Second, an increase in the gold royalty from one percent to 3.5 percent of sales price.

Regarding the copper royalty at three percent, this has been adjusted in line with the Government Regulation No. 45/2003 on State Royalty Revenue.

Purnomo Yusgiantoro, Energy and Mineral Resources Minister, said he would not change the working contract's contents.

“For proposing (changes), we must discuss these with them (Freeport). We don't change them automatically,” he said.

Mindo Pangaribuan, Freeport Indonesia's spokesperson, acknowledged that his side had not yet received the result of the government's audit into Freeport.

As regards environment matters, Freeport, said Mindo, has improved its environmental performance in line with provisions.

He said that Freeport carried out environmental audit every year.

The community development fee that Freeport spent last year was around US$77 million.

Rachmat Witoelar, Environment Minister, said his ministry would continue supervising PT Freeport Indonesia's mining in Papua.

“They (Freeport) must meet all permit requirements so that they doesn't damage the environment,” he said.

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