Government Explains Freeport Indonesia´s Contract Extension

Sunday, 03 September 2017 , 09:00:00 WIB -

Minister of Energy and Mineral Resources Ignasius Jonan (second right) is seen leading a plenary cabinet meeting at the State Palace, Jakarta, Tuesday (29/8). (ANTARA)

JAKARTA, GRES.NEWS – PT Freeport Indonesia and the government has finally agreed on three major points: The mining company will build a smelter that will operate in 2022, or five years from now; more revenue from the Grasberg mine for the government and 51 percent divestment.

In exchange, PT Freeport Indonesia would obtain a 10-year contract extension, to 2031, and an option to further extend the contract to 2041.

However, many criticize the government for allowing the US-based company to retain 100 percent control of the operations at the mine.

"They have been criticizing [us] for not ending Freeport’s contract in 2021. Why didn’t they criticize before the negotiation started? Why are they shouting now (after the deal is reached, red)?" said Ignasius Jonan, Minister of Energy and Mineral Resources, Thursday (1/9).

According to Jonan, obtaining 51 percent is already satisfactory for Indonesia, bearing in mind that the company insisted only 30 percent.

Jonan further claimed that Indonesia lacks the capacity to manage the Grasberg mine considering the mine’s size and complexity.

"Many people (in Indonesia, red) think they are experts. They are saying that Indonesia can, but none of them has managed a mine that large in their life," he said.

Jonan explained that if the government ends the contract in 2021, Papua’s economy will be affected and thus Papuans will see their economy drop. The central government, he explained, only receive US$1 billion. Meanwhile, PT Freeport Indonesia has been supporting the economy of Papuans living around its operations. (dtc/mfb)