Indonesia Should Not Extend Freeport Contract: Youth Committee

By webadmin on 01:57 pm Aug 13, 2012
Category Archive

Los Angeles Clippers forward Blake Griffin (32) shoots over Denver Nuggets center Timofey Mozgov (25) during the second half at Staples Center. (Richard Mackson / USA TODAY Sports)

A youth leader said that Indonesia should not extend it’s contract to the local subsidiary of Freeport-McMoran Copper & Gold in Papua when it expires in 2021.

“I [think] the work contract should no longer be extended because it is disadvantageous to our nation,” Ali Muhsin, an executive board member of the Indonesian National Youth Committee (KNPI) for state company affairs said in Jakarta on Sunday.

Ali said that the mineral potentials of restive Papua, which contains the world’s biggest gold and second-biggest copper mine, had been exploited by Freeport, and must instead be utilized by the Indonesian people.

“The work contract obviously harms the interests of the nation because it does not live up the people’s expectation,” Ali said.

Ali believes that Indonesia can learn the technical know-how to take over the mine.

“I’m convinced we are able to take over [the] technology. We have the needed technology and we can use it. While waiting for the end of the contract in 2021, we have to prepare ourselves,” he added.

General Chairman of the People’s Democratic Party (PRD) Agus Jabo shared Ali’s opinion.

“Mining companies should not be managed by foreigners,” Agus said, adding that Indonesia needed a leader who “had the guts to fight for the small people against foreign suppression and power.”

“We need a bold leader like Soekarno who opposed foreign powers,” he said. 

After extended negotiations between Freeport Indonesia and Coordinating Minister for the Economy Hatta Rajasa, Freeport agreed to increase it’s royalty, or percentage of its gross sales of gold, to the government; the percentage increase, however, has not been specified.

Freeport currently pays a 1 percent royalty on their gross sales of gold, because their contract has effectively been “grandfathered” into new regulations, which call for a 3.75 percent royalty for gold — the Indonesian legal system does not recognize the principle of retroactivity.

But Dewi Aryani of the House of Representatives Commission VII said the royalty is just one of several points in the contract requiring adjustment, and said a lack of agreement reflected the “arrogance of the US gold and copper mining company.” 

“The country’s dignity has been trampled on, and nothing can be done facing Freeport,” the legislator from the Democratic Party of Struggle (PDI-P) told Antara news agency.

Dewi said the government wants a revision of the contract concerning six points: The concession area, extension of contract, royalties, regulations requiring local processing and refining of mineral ores, share divestment and the requirement to use domestic mining goods and services.

Dewi said the success in renegotiation with Freeport potentially represents “good momentum” for future negotiations with foreign investors. 

Antara