11December2017

Home Editorial BETWEEN THE GOVERNMENT AND PT FREEPORT INDONESIA

BETWEEN THE GOVERNMENT AND PT FREEPORT INDONESIA

PT Freeport Indonesia -PT F I is an affiliate company of Freeport-McMoran Copper & Gold Inc. In its activities, the company mines, processes and explores ore containing copper, gold, and silver. PT Freeport Indonesia operates in a plateau in Mimika, Papua province, Indonesia. It markets concentrates containing copper, gold and silver all over the world.

It is said that PTFI’s policy is to provide equal job opportunity to all the community. The company even claims it also upholds the rights of workers in accordance with applicable law in Indonesia. According to the website of PT Freeport Indonesia, the company has a commitment to protect human rights and has firmly enacted and enforced human rights policies in the company.

But recently, problems have emerged between PT Freeport Indonesia and the government of Indonesia, namely after the Minister of Energy and Mineral Resources, Ignasius Jonan issued regulation related to concentrate export. PT Freeport Indonesia did not agree and rejected the change of the Working Contract into Special Mining Business Permit.

Although the law on Coal and Mineral Mining year 2009 states that the working contract remains valid for a period of time, the government requested that Freeport terminated the Contract of Work in 1991 and replaces it with a Special Mining Business Permit (IUPK) and short term export agreement. The government has so far lost the work contract with Freeport. Even downstream effort in accordance with Law on Mineral and Coal No. 4/2009 is still not complied with. Clearly, the company has ignored the Law applicable in Indonesia.

Freeport argued it has built an activity with 32,000 Indonesian workers, and based on the Work Contract, the government has received 60% of the direct financial benefit from the operation. According to Freeport, taxes, royalties, and dividends paid to the government since 1991 has exceeded $16.5 billion dollars, while Freeport-McMoRan received $10.8 billion dollars in dividends. Up to 2041, the company will pay more than $40 billion dollars to the Indonesian government.

Whatever has been said by Freeport, the government must firmly demonstrate that Indonesian is a sovereign country. The country oversees effort of down-streaming of the management of natural resources really works. Even if not explored today, in the future it will be very useful for the next generation. The problem with Freeport should be resolved and should not create new problems because the company is headquartered in the USA, a superpower country with a new president whose policy is not necessarily beneficial for Indonesia.

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