Government to extend Freeport?s mining contract

The government will decide on the fate of PT Freeport Indonesia?s mining contract of work before July 25 of this year, the deadline for the conclusion of the amendment of the contract, reports said Saturday.

Koran Tempo quoted Minister of Energy and Mineral Resources Sudirman Said as saying that the government must decide whether to extend or not the contract to provide certainty for the company as it plans to spend US$17.3 billion worth of investment including $15 billion for underground mine operation in Papua, and $2.3 billion for the development of domestic copper cathode smelter.

?The issue on Freeport will be decided before July 25,? Sudirman said, adding that to facilitate the plan, existing regulations must be revised including Government Regulation No 77/2014, which stipulates that contract extension can only be decided two years before its expiry. The current contract of PT Freeport expires in 2021.

PT Freeport, a subsidiary of US-based Freeport McMoRan Copper & Gold, has been seeking for an extension of the contract to 2041 to allow it to return the huge investment it would make over the next few years.

The company and the government are currently in the process of amending the mining contract that to comply with the 2009 Mining Law, which would among others make the company to pay higher royalties and divest more shares to Indonesian investors. The issue of the contract extension, however, has been excluded in the amendment process so far. (*)