T

he Supreme Audit Agency (BPK) has given the green light for the divestment deal of gold and copper miner PT Freeport Indonesia (PTFI), the operator of the giant Grasberg mine in Papua, after clarifying its previous report about the latter’s alleged mining waste that has caused environmental losses of almost US$13 billion.

The amount of alleged environmental losses caused a public stir months ago after media reports quoted BPK commissioner Rizal Djalil as saying that the value was considered state losses and that PTFI failed to respond for 333 days since the audit came out.

However, on Wednesday, Rizal clarified the issue by saying it was not state losses, but rather an ecosystem loss and it has been followed up with an action plan to repair the damage.

Rizal said PTFI would have to pay Rp 460 billion ($31.8 million) in non-tax revenue (PNBP) after the company signed the final deal for its divestment, which was scheduled to occur soon. The payment is the result of misusing 4,535.93 hectares of protected areas during the 2008-2015 period.

The deadline for PTFI to complete the payment is 24 months after the completion of the divestment deal, which will increase Indonesia’s ownership from 9.36 to 51.23 percent.

“The permit [for using 4,535.93 ha] is currently in the process of being finalized by the Environment and Forestry Ministry,” he said, referring to a forest area utilization permit (IPPKH).

Environment and Forestry Minister Siti Nurbaya Bakar said at the same event that she was confident that the IPPKH for 4,535.93 ha could be completed before the end of Wednesday.

“We are in the process of finalizing it with the Papua governor, who we contacted at 1 p.m. today [Wednesday]. Therefore, we are sure we will finish it today,” she said.

Rizal said PTFI had come up with a road map as an action plan to repair the damage that had been discussed with the Environment and Forestry Ministry, adding that the BPK would continue overseeing the implementation of the road map.

Siti Nurbaya explained that it would comprise detailed studies, such as building dams and efforts to recycle the tailing waste, which could reach up to 200,000 tons per day.

“Implementing the road map is a hard task. Therefore, it will be divided into two parts. The first part, including the concepting phase, started in 2018 and will run until 2024. The last part will be for the period of 2025 until 2030,” she said.

The two issues of misused protected areas and tailing were included in the 48 findings from the BPK as a result of their audit into the implementation of PTFI’s Contract of Work (CoW) during the fiscal years of 2013 to 2015.

Siti further said that of the total 48 findings, which turned into environmental work both for the government and PTFI, 41 findings had been either completed or resolved.

The 48 findings consisted of: 31 environment permit violations, five water pollution cases, five air pollution cases and seven violations in tailing management and poisonous and dangerous materials (B3).

The BPK also noted that PTFI’s problem of a lack of state revenue in the form of PNBP and the excess of total reclamation guarantee disbursement amounting to $1.6 million had been settled in accordance with the applicable laws and regulations.

When asked about the BPK’s announcement on PTFI’s obligation to pay the PNBP regarding the misused protected forest, company spokesperson Riza Pratama said on Wednesday that the firm was “still in internal discussion to study the announcement”.

Rendi Witular, PT Indonesia Asahan Aluminium’s (Inalum) head of corporate communications, said in a text message on Wednesday that the state mining holding company would also be involved in the obligation, but only with a contribution of 9.36 percent based on Indonesia’s current shares in PTFI, not after it held a 51 percent stake in PTFI.

“All were the past actions [of PTFI]; we will only contribute 9.36 percent,” he said.

Inalum is the government’s representative in the divestment deal of PTFI, of which the majority of shares are still held by United States mining giant Freeport McMoRan (FCX) with 90.64 percent.

The divestment deal was only waiting for the issuance of the IPPKH by Siti Nurbaya’s ministry, and once it had been finalized, the signing could be started, said Energy and Mineral Resources Minister Ignasius Jonan.

“[….] The transaction is only waiting for the issuance of the IPPKH as our matters such as smelter development commitment, alteration of the contract from CoW to IUPK [special mining permit] and an agreement to have higher state revenue from taxes have been completed,” he said, adding that the government had imposed a prevailing tax scheme on PTFI.

Inalum president director Budi Gunadi Sadikin previously said it had secured and was ready to disburse the $3.85 billion to increase the ownership in PTFI from only 9.36 to 51.23 percent, along with the Papua administration.