The Jakarta Post
President Joko 'Jokowi' Widodo has indicated that he will approve a plan to revise Freeport McMoRan Copper & Gold. Inc.'s contract of work (COW), with a top minister conceding that it would be economically unfeasible for the government not to allow the US mining giant to continue its operations in Indonesia.
The information was revealed after Freeport chairman James 'Jim Bob' Moffett met Jokowi on Thursday morning at the State Palace, where executives from the Arizona-based firm stated their intention to continue investing in Indonesia.
The President has indicated that he will approve the conversion of the company's COW into a special mining license (IUPK), according to Maroef Sjamsuddin, the president director of PT Freeport Indonesia, a local affiliate of the US miner.
'The President respects the investments that will be made by Freeport,' Maroef told reporters after the meeting.
When asked whether that meant the President had in principal agreed to the contract conversion for Freeport, Maroef said: "Yes, the signs are there. However, I don't want to prematurely conclude that it has been approved.'
Freeport's current COW will expire in 2021 and, under current regulations, any request for an extension can only be made two years prior to its expiry, or in this case in 2019, when Jokowi's current term as president will end.
Changing the COW to an IUPK would allow the company to get an early extension. An IUPK contract has a maximum term of 20 years and can be extended twice for subsequent terms of 10 years each.
When asked about the Freeport CEO's statement, Energy and Mineral Resources Minister Sudirman Said confirmed that it would be economically 'impossible' for the government to cut its investment relations with Freeport.
'In general, the message is that if we talk about investment, about the law on smelters, about electricity, it would be impossible to even consider breaking [Freeport's contract],' he told reporters after the meeting.
Freeport has operated the Grasberg mine in Mimika regency, Papua, since 1967, with the mining site being home to the largest gold mine and the third-largest copper mine in the world.
Despite the mine's hefty contribution to Freeport's financial performance, every year the firm only pays the government 1 percent in royalties for mining gold and 3.5 percent for copper. (hhr)
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