Sudirman Said: There is no Letter for Contract Extension from Freeport

KATADATA - The Energy and Mineral Resources (EMR) Minister Sudirman Said denies the issue that the government has agreed to extend the contract of PT Freeport Indonesia. And so, he asks so that the people would not make the situation any worse than it already is by spreading the rumors of contract extension of the American company. 

“The people that don’t understand this need to stop speculating about contract extension, because it’s not true at all,” Sudirman explained in the Directorate General for Electricity, Jakarta, Monday (12/10). 

Sudirman also said that the government is only committed to guarantee about the long-term investment of Freeport in Indonesia. His side has also sent letter to Freeport Indonesia regarding the government’s commitment. The content of the letter is hand-in-hand with the instruction of President Joko Widodo (Jokowi), who claims that Indonesia would give political insurance as well as legal protection regarding the long-term investment of Freeport in Indonesia.

“There’s no word about contract extension (in the letter), but the decision on that would become the solution for the preparation of the investment in a long-term scale,” Sudirman explained. 

Right now the government is still unable to decide the contract extension, since the Government Regulation (PP) No. 74 Year 2014 said that the negotiation process to extend the mining contract can only be done 2 years before the contract ends, and that is 2019. 

However, the EMR Ministry is planning to revise the PP. In the revision that is still being reviewed, the government would change the condition regarding the renegotiation time limit, which is changed to be 10 years before the contract ends. And with the revision, the renegotiation of Freeport’s contract can soon be done before 2019. 

Chairman of the Board Freeport-McMoRan Inc., James R. Moffett, said that the government had assured them that Freeport’s Indonesia’s contract will be extended after 2021. 

And last weekend, Freeport-McMoRan Inc. announced that the Indonesian government has agreed on Freeport Indonesia’s long-term operation and investment plan. Other than committing themselves to invest, Freeport also agreed to increase the values of royalty, processing and refining within the country, divestment of ownerships, and an increase in local components. 

James said that the government would also give law and fiscal certainty that is included in the work contract of Freeport Indonesia. “We are hoping to continue our partnership and long-term investment plan to forward the economy, open more job vacancies, and increase the economy of Papua,” James said in his explanation that is quoted from the official website of EMR Ministry, Friday (9/10). 

Previously the Maritime and Natural Resources Coordinating Minister Rizal Ramli criticized the EMR Ministry’s plan to change the rules regarding the mining contract. With the mining reserves to still be good for another 30 to 40 years, the ministry should not be too hasty in taking decision like this. And it is even more right considering that in the next 5 to 10 years there will be many mining work contracts that would expire. 

“I am really disappointed with the mentality of officers like that. In order to appease various importance, he pushed so that the Freeport’s negotiation can be accelerated, and other similar things,” Rizal said in a Seminar with a theme “state’s readiness and strategies in facing national energy crisis” in Jakarta, Wednesday (7/10). 

He also reminded so that the tragedy of Freeport Indonesia’s contract extension in 1986 would not reoccur. Back then, there were officials that were suspected to receive bribery in order to extend the contract without fixing with several terms and condition in the contract.