President Jokowi: June 2024, Target for Additional Freeport Shares
Indonesia immediately increased its stake in PT Freeport Indonesia to 61 percent. Constraints on IUPK extension.
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President Joko Widodo
JAKARTA, KOMPAS - The Indonesian government is currently finalizing the increase of shares in PT Freeport Indonesia from 51 percent to 61 percent. The hope is that this can be realized in June of this year.
President Joko Widodo stated that Indonesia's ownership of shares in PT Freeport Indonesia was initially only 9 percent. After negotiations, Indonesia now owns 51 percent of the shares. "Therefore, Freeport is no longer owned by the United States, but rather by Indonesia. Soon we will add (shares) to make it 61 percent," said the President during the opening ceremony of the 12th Congress of the Indonesian Buddhist Students Association (Hikmabudhi) in Jakarta on Thursday (28/3/2024).
With a 51 percent share ownership, 61 percent of PT Freeport Indonesia's revenue goes to the country. If Indonesia obtains a 61 percent share, Freeport's revenue entering the country will increase to 81 percent.
After the event, journalists asked about the process of the stock divestment. "It is still in the negotiation process and the preparation of regulations, but I am confident that we can achieve that figure," said the President.
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The work activities of employees at the construction project site of the processing and refining plant, or the second smelter of PT Freeport Indonesia, at the Java Integrated Industrial and Port Estate (JIIPE) Special Economic Zone in Gresik, East Java, took place on Tuesday (20/6/2023).
Also read: PT Freeport asked by President to speed up copper smelter operations
It is acknowledged that negotiations were quite tough. However, when the President received Freeport officials at the Merdeka Palace, Thursday morning, the President Director of PT Freeport Indonesia Tony Wenas explained that the meeting also discussed the hope of extending the copper export permit.
Because of this, Freeport no longer belongs to the United States, but to Indonesia. Soon we will increase (the share) to 61 percent.
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CEO and Chairman of Freeport McMoran Inc, Richard Adkerson (right), walked away from the Presidential Palace Complex after meeting with President Joko Widodo at Merdeka Palace, Jakarta, on Thursday (28/3/2024). During the meeting, Adkerson was accompanied by CEO of PT Freeport Indonesia, Tony Wenas, and Board of Commissioners of PT Freeport Indonesia, Kathleen Quirk.
Late to build smelter
Previously, the government had relaxed the ban on copper exports that was initially set to start in June 2023. However, due to the delay in the construction of refining facilities (smelters), the government has finally pushed back the deadline to June 2024.
Currently, Freeport once again hopes that the deadline for copper export cessation can be postponed. "If we cannot export, the state's revenue will decrease by approximately 2 billion US dollars or around 30 trillion IDR from June to December 2024," he said in a statement after the meeting.
The reduction of state revenue is solely from copper exports. Therefore, according to Tony, this matter has actually been discussed with the relevant minister. "You can ask the minister about it," said Tony.
Asked about hopes of delaying the ban on copper exports, President Jokowi was evasive. "This, the negotiations (about shares) will be completed first, then the next thing will be taken care of," he said.
According to the Minister of Investment Bahlil Lahadalia who accompanied President Jokowi received the CEO and Chairman of Freeport McMoran Inc Richard Adkerson as well as the President of Freeport McMoran Kathleen Quirk and Tony Wenas, PT Freeport Indonesia's special mining business permit (IUPK) contract period will also be increased by 20 years along with the divestment of these shares. PT Freeport Indonesia's IUPK extension from 2041 to 2061 will be granted.
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The CEO of PT Freeport Indonesia (PTFI), Tony Wenas, provided a statement to journalists at the Presidential Palace Complex in Jakarta on Thursday (28/3/2024). Prior to this, Tony met with President Joko Widodo at the Merdeka Palace along with Freeport McMoran Inc's CEO and Chairman, Richard Adkerson, and the Board of Commissioners of PT Freeport Indonesia, Kathleen Quirk.
However, regarding this matter, according to Bahlil, there will be adjustments to government regulations. "We still need to wait for the government regulation, we have to wait for it. There will be adjustments," he said.
This adjustment, he continued, does not only apply to Freeport, but to everyone. Apart from that, he said that Indonesia's IUPK Freeport also means providing great benefits for Indonesia.
Later, still waiting for the PP first, wait for the PP. There are adjustments.
The problem lies in the Law Number 3 of 2020 concerning Mineral and Coal Mining, which states in Article 169B, paragraph (2) that to obtain continued operation of contracts/agreements, an extension application must be submitted at least five years or no later than one year before the contract expires. If the IUPK currently applied to PT Freeport Indonesia is valid until 2041, it means that the extension application can only be made in 2036.
Negotiations must be completed
In the same interview session, President Jokowi emphasized the need to finalize regulations first. This will enable negotiations to be finalized as soon as possible. The President is targeting the completion of all regulations in June.
"I saw it earlier, I targeted it, well, until June, as soon as possible. If possible, as soon as possible, but no later than June," he said.
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Investment Minister Bahlil Lahadalia provided a statement to journalists following a breaking of the fast event at the State Palace in Jakarta on Thursday (28/3/2024) evening.
Nevertheless, the Minister of Energy and Mineral Resources Arifin Tasrif said that the IUPK extension, share divestment and smelter were one unit. "Yes, there must be one. Including the smelter. Right, he needs to explore, the smelter is new, it will be completed this year. Right, it will be full in 2025, right? "I'm 16 years old and I'm dead without a stone," he said.
However, according to Arifin, for divestment, the government does not deposit money. "The government will not spend more money," he said to journalists in the Presidential Palace Complex, Jakarta, on Thursday (28/3/2024) evening, after breaking the fast together with President Jokowi, Vice President Ma'ruf Amin, and the Cabinet of Indonesia Maju.
Also read: Freeport Targets 3 Million Tons of Copper Refined Domestically by 2024
According to Kompas's notes, President Jokowi met Richard Adkerson in Washington DC on November 13 2023. At that time, the President hoped that the increase in government shares of 10 percent in PT Freeport Indonesia could be decided soon. Thus, the extension of PT Freeport Indonesia's IUPK contract at the Grasberg Mine, Papua, can be issued immediately.
"I am glad to hear that the discussion on the addition of 10 percent of Freeport's shares in Indonesia and the extension of the mining permit for 20 years has reached its final stage," said the President at the time.
