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Jakarta Post

State revenue to dip after PTFI stops operations

  • Amahl S. Azwar and Nethy Dharma Somba

    The Jakarta Post

Jakarta/Jayapura   /   Wed, May 22, 2013   /  10:45 am

The government has instructed PT Freeport Indonesia (PTFI), a subsidiary of US mining giant Freeport McMoRan Copper and Gold, to cease all operations until an investigation into a fatal incident at its Papua training facility is concluded.

As a consequence, the government is likely to lose US$1.82 million in state revenue every day during the suspension of operations at the mining site, Energy and Mineral Resources Ministry director general for coal and minerals Thamrin Sihite said on Tuesday.

'€œHowever, this is a risk that we must take. Our current focus is to evacuate all of the victims,'€ he said at the ministry, adding the government was pushing for PTFI, one of the country'€™s largest taxpayers, to immediately conclude its investigation.

Thamrin also said PTFI was unlikely to meet its production target of 1.3 million troy ounces of gold by end-year, up by 44.4 percent from the 900,000 troy ounces the mining firm booked in 2012.

Of the 38 workers trapped in a tunnel that collapsed on May 14 at PTFI'€™s Big Gossan training facility in Timika, Papua, 28 died while 10 suffered minor to major injuries.

Eight bodies removed from the tunnel on Tuesday, the last day of evacuation, were identified as Lewi Mofu, Lestari Siahaan, Herman Susanto, Daniel Tedy Eramuri, David Gobay, Febry Tandungan, Ferry Edison Pangaribuan and Wandi.

PTFI has ceased all production and has only carried out maintenance work since rescue efforts started.

Separately, Energy and Mineral Resources Minister Jero Wacik said at the Presidential Palace in Jakarta that his office would summon PTFI president director Rozik B. Soetjipto to explain the incident.

The Democratic Party politician also played down concern by labor unions '€” such as the Confederation of Indonesian Workers Union (KSPI) '€” that the government might side with Freeport in the aftermath of the incident.

'€œSuch a large company must take responsibility for its workers,'€ said Jero.

PTFI technical affairs director Rudy Seba said in a text message that his company would focus on concluding the investigation '€œas soon as possible'€, adding that '€œwe are unable to talk about production until the investigation is concluded and the workers can work safely'€.

PTFI is among the mining giants that have yet to complete its contract renegotiations with the government.

The renegotiations, which must be concluded by the end of the year, cover six main issues: an increase in royalty payments, the establishment of local smelters, the use of local goods and services, divestment, contract extensions and the size of mining areas.

PTFI in general has refused to increase its royalty payments and have its working areas reduced to 25,000 hectares. It has also refused to build smelters to process ores locally despite the 2009 Mining Law, which will ban exports of unprocessed mineral ores starting from 2014. PTFI earlier said that it may have to lay off workers next year should the government decline to amend the law.

Bagus BT Saragih also contributed reporting from Jakarta

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