The Jakarta Post
A number of state-owned companies are preparing to become new partners for PT Freeport Indonesia, which currently holds the contract of work at Grasberg mining site in Papua, to work on various supporting businesses, ranging from the supply of fuel to explosives.
The Energy and Mineral Resources Ministry's expert staff for the mineral and coal sector, Said Didu, said as many as seven state-owned enterprises (SOEs) were ready to cooperate with the copper miner. Among the SOEs are cement producer PT Semen Indonesia, oil and gas giant Pertamina, weaponry maker PT Pindad, surveyor firm PT Surveyor Indonesia, coal miner PT Bukit Asam (PTBA) and explosives maker PT Dahana.
'Cooperation with the SOEs is necessary, particularly to increase the utilization of local goods and services. Moreover, cooperation is also expected as a method of knowledge and technology transfer,' Said added.
According to the ministry's estimate, Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Inc., usually performs procurement worth US$1 billion in a year. Out of the total, as much as $900 million goes toward contracts for goods and services.
Maximizing local content to support copper mining activities is a direct order from President Joko 'Jokowi' Widodo, with regard to the operations of Freeport Indonesia in Papua, according to Energy and Mineral Resources Minister Sudirman Said.
Several SOEs have already been involved in supporting business for Freeport Indonesia, such as Pertamina and PT Sucofindo, according to the miner's spokesperson Riza Pratama.
'We are encouraging participations from SOEs. However, they have to meet the quality we require in addition to competitive prices and consistent supplies,' Riza said.
Any agreement, he added, would be followed up by trial periods before the enterprises could fully play a part.
'We also have to honor existing contracts [established previously with private firms]. There are trial processes to ensure that we will get the quality and consistent supplies,' Riza said.
Freeport Indonesia manages the biggest gold mine and the third largest copper mine in the world. The company has been operating in the country since 1967 and the government is trying to make the company's business give a bigger multiplier effect to the country as well as the province.
PTBA corporate secretary Joko Pramono said the company was currently working on the details of a planned partnership with Freeport.
'At this moment, a team has been assigned to discuss about PTBA supply for Freeport's coal fired power plant. The exact volume and price are being discussed but the plant needs high grade coal at about 800,000 tons per year,' Joko said.
Meanwhile, Semen Indonesia remains assessing the market in the Papua area, according to the company's corporate secretary, Agung Wiharto.
Agung said that Semen Indonesia was among a number of SOEs that recently paid a visit to Grasberg and were asked to assess business potentials.
'The visit has prompted us to consider the market, partly as demand in the area is low and infrastructure facility is limited,' Agung said.
He cited that cement consumption in Papua was only around 600,000 tons per year or only about 1 percent of the national demand. Semen Indonesia, the shares of which are traded on the Indonesia Stock Exchange under a code SMGR, currently has a cement packing plant in Sorong, Papua.
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