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Jakarta Post

Trump’s shadow over Freeport won’t bend Indonesia

  • Arif Gunawan S.

    The Jakarta Post

Jakarta   /   Mon, January 23, 2017   /  06:35 am
Trump’s shadow over Freeport won’t bend Indonesia Dig deeper – A heavy vehicle passes an open pit mining site at gold and copper miner PT Freeport Indonesia’s open pit facility in Grasberg, Tembagapura, Mimika, Papua. (JP/Nethy Dharma Somba)

Activists are furious, vowing to bring the case to the Constitutional Court, while PT Freeport Indonesia has sent a letter listing some “circumstances” around the implementation of the latest mineral-ore export rules amid the inauguration of the new US protectionist president.

However, these things have yet to change the government’s stance on its rules on mineral exports and share divestment. No door is going to be opened for negotiation, not until time proves the opposite, an executive at the Energy and Mineral Resources Ministry has said.

Within a month, complaints and challenges have surfaced against the new four rules that allow miners to export semiprocessed minerals while requiring them to convert their contract of work (CoW) permits into special mining licenses (IUPKs) and divest their shares within five years.

The latest challenge comes from gold and copper miner Freeport Indonesia, which has sent a letter informing the government of its “commitment” to obey the rules while specifying several “circumstances” that should be taken into consideration.

(Read also: Jonan tells Freeport to release 51 percent of shares)

“It’s not a commitment letter but just a letter informing us of its intention to obey the rules while specifying ‘these’ and ‘those’ circumstances,” Energy and Mineral Resources deputy minister Arcandra Tahar told editors during a gathering on Saturday, adding that there was no obligation for the government to reply to the letter. “The President and the minister have signed the regulations. Freeport should just follow them,” he said.

Freeport has operated in Indonesia for the past 50 years. The company sent the letter just a week before the inauguration of US President Donald Trump, who is known for his protectionist views and his “America First” rhetoric.

“Freeport Indonesia has presented to the government its willingness to convert [its CoW] into an IUPK, that will happen if there is an agreement over investment stability and also fiscal and legal certainty,” Freeport Indonesia spokesman Riza Pratama told The Jakarta Post recently, explaining about the company’s letter.

US media reported earlier that Trump, the real estate tycoon, had enlisted Carl Icahn, a top shareholder in Freeport-McMoRan, to be his special adviser on business regulations in December last year. Freeport’s shipments of copper concentrate from Indonesia have been halted since Jan. 12 in accordance with rules on domestic mineral processing.

Trump is also a close friend of Setya Novanto, the House of Representatives speaker who sparked public uproar when he showed up at a Trump campaign rally in September 2015. Trump introduced him as a special guest during the event.

However, the ministry insisted that the government merely stipulated rules that could be adopted by companies while preventing any flagrant violation of the 2009 Mining Law.

“The miners should have built the smelters as the law required them to do. But in reality, they failed to do so due to many factors. The latest rules are actually pushing them to finish the smelters, with tighter and more measurable supervision. So it’s not a relaxation,” the ministry’s minerals and coal director general Bambang Gatot Ariyono said.

Indonesia, he further underlined, would not negotiate with any miner, including Freeport, on new rules requiring its local subsidiary to convert its permit in order to resume its copper concentrate exports. The government will also refuse to negotiate the stipulation requiring Freeport to divest 51 percent of its shares, he added.

Meanwhile, a group of experts and environmentalists calling themselves the Civil Society Coalition has announced a plan to submit its request to the Constitutional Court this week. The coalition consists of at least 20 institutions, including the Legal Aid Institute (LBH), Energy World Indonesia, the Mining Advocacy Network (Jatam) and the Indonesian Forum for the Environment (Walhi).

Amid these new challenges, Arcandra acknowledged that the current administration would try to defend its firm stance on the impossibility of further negotiations.

“How successful will the government be in guarding the implementation of these rules? Well, I can only say this: time will tell,” he said, declining to elaborate on the potential judicial review lawsuit and other challenges that the ministry is now facing.

 

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