Adkerson said Freeport Indonesia (PTFI) has sent a notification to Energy and Mineral Resource Minister Ignatius Jonan on the government`s defaults and violation of the firm`s contract of work (CoW).
Jakarta (ANTARA News) - President and CEO of US mining giant Freeport McMoRan, Richard C. Adkerson, has said that the company would take the Indonesian government to arbitration over the absence of a solution to the contractual dispute.

Adkerson told the press here on Monday that PT Freeport Indonesia (PTFI) has sent a notification on Friday to Energy and Mineral Resource Minister Ignatius Jonan on the governments defaults and violation of the firms contract of work (CoW).

The government could not change the contract of work signed in 1991 unilaterally, by allowing exports only after it changed its status as special mining business permit (IUPK), he said.

"The letter stated that the Indonesian government and Freeport have 120 days to settle the disputes. At the end of that period, if the disputes are not resolved, then we reserve the right at that time to commence arbitration," he noted.

He admitted that the company has continued to negotiate with the government regarding the contract security, as it would need legal and fiscal certainty to invest in Indonesia.

Adkerson stated that since Jan 12, the company could not meet contractual obligations for copper concentrate shipments from the mine, following a five-week export stoppage.

"We have sent two ships to Gresik after the last export permit, but we could not export the concentrate due to workers strike. We have stopped operations for 10 days, because there was no place to store the concentrate," he said, adding that the parent company had not received dividends from PTFI for the past five years.

In his previous statement, Adkerson said that based on the CoW, Freeport has invested US$12 billion and is now investing $15 billion to develop its underground reserves.

The government had received $16.5 billion in financial benefits from the operations of the Papua mine in the form of taxes, royalties, and dividends since 1991, while Freeport had received $10.8 billion in the form of dividends, he remarked.

"We do not want to see the operation costs cut and the capital expenditure cut by $1.1 billion. Normally, we spend $2 billion per year with business entities in Indonesia, both in Papua and other parts of Indonesia. And we have to face lay-offs," he noted.

Under the government regulation 1/2017 on mineral and coal mining, the government would extend the export of concentrate on conditions that CoW holders must change their licenses into mining business permits (IUP) and special mining business permits (IUPK) and agree to build smelters within five years.

In addition, the company would have to follow a prevailing tax system and divest up to 51 percent of its shares.(*)

Editor: Heru Purwanto
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