A PT Freeport Indonesia mining operation activity in Timika, Papua, Saturday (12/5/2012). The FI work contract will end in 2021 and they can propose an operation extension in 2019, at the earliest.
JAKARTA, KOMPAS — The government has announced that PT Freeport Indonesia has agreed to meet its 51 percent divestment requirement and a negotiation is currently being held to discuss details of the agreement.
The 51 percent divestment requirement is stipulated in Government Regulation No. 1 of 2017 on the fourth amendment of Government Regulation No. 23/2010 concerning the Implementation of Mineral and Coal Mining Business Activities.
Energy and Mineral Resources Minister Ignasius Jonan said the United States mining company had agreed to divest 51 percent of its shares to Indonesian parties. The procedure is still being negotiated.
"If it\'s about divestment and smelter construction. I think, in principle, everything has been settled. There is nothing new, actually. We are now waiting to discuss taxation," Jonan said after meeting with President Joko “Jokowi” Widodo at the State Palace in Jakarta on Monday.
Jonan did not elaborate on whether the shares would be sold to private or state-owned enterprises (SOEs).
National interests
Jonan promised to explain the details of the divestment scheme after final negotiations are completed, but declined to comment on the government\'s offer to Freeport Indonesia.
“The government will accommodate the nation’s interests. That’s the main thing to do,” Jonan said.
Although the divestment requirement has been approved, issues related to taxation and local payments have not been settled. These issues are under the authority of the Finance Ministry and it is the ministry which that explain them, he said.
"Please ask the finance minister," Jonan added.
Jokowi and Jonan held a closed meeting on Monday morning, which lasted for about one hour and 30 minutes. Jonan was reluctant to explain all the issues discussed with the President because he said it was inappropriate to explain it to journalists.
Jonan only answered a number of questions, one of which was about the future PT Freeport Indonesia’s operations.
The divestment of shares is regulated under Article 97 of Government Regulation No. 1/2017. The article stipulates that the holder of a mining permit (IUP) and a special IUP for foreign investment, after five years of commercial production, is obliged to gradually divest its shares to at least 51 percent up to the 10th year of its operations to Indonesian parties.
The divestment can be carried out in stages: at least 20 percent in the sixth year, 30 percent in the seventh year, 37 percent in the eighth year, 44 percent in the ninth year and 51 percent in the 10th year.
Private
The shares must then be sold to Indonesian parties, which include the central government, provincial or regency/city government, state-owned enterprises, local government-owned enterprises and private enterprises.
The central government gets the first option to buy the shares, but if it declines, the shares are offered to the local government and private companies.
Separately, the vice president in charge of corporate communications at PT Freeport Indonesia, Riza Pratama, did not provide a clear answer when asked about Jonan\'s statement.
According to him, the four points being negotiated with the Indonesian government are related to an integrated negotiation package.
"As we\'ve already said, all the points in the negotiations are part of an integrated negotiation package. The divestment is one of four negotiating points," Riza said.
According to Riza, negotiations with the government are still underway and include issues related to the divestment.
