The director general of mineral and coal mining of the ministry of energy and mineral resources, Thamrin Sihite, said here on Thursday the request would be conveyed during the renegotiation of the mining contract with the company.
"They (Freeport) have taken a lot of profits so far. We wish they would divest their shares," he said.
He added that the process of divestment, however, would not be based upon Government Regulation Number 24, 2012 which requires foreign mineral and coal mining companies to divest 51 percent of their shares to the country.
The divestment regulation, signed by President Susilo Bambang Yudhoyono on February 21, 2012, is not retroactive and only applies to agreements with new mining companies.
"The process of divestment in Freeport will depend upon the results of negotiations later," he said.
Currently, the Indonesian government holds only 9.36 percent of Freeport shares, which it has held since the working contract with Freeport was first signed in 1967.
When the contract was extended in 1991, Freeport was required to divest 51 percent of its shares.
However, the clause was later dropped following the issuance of Government Regulation Number 20, 1994 on shareholding in companies established within the framework of foreign investments.
Based upon Article 24 in Freeport`s contract extension, the divestment obligation is divided into two stages.
The first stage of the divestment reaches 9.36 percent during the first 10 years, from 1991-2001, while the second stage mandated turning over two percent of their shares per year until reaching 51 percent in 2001.
Articles in the contract also require Freeport to follow the rules that would to be published later.
After the issuance of Government Regulation Number 24 of 1994, Freeport`s divestment obligation, based on the 1991 contract, were nullified.
Meanwhile, Government Regulation Number 24 of 2012 is a revision of Government Regulation Number 23 of 2010 and only requires 20 percent divestment.
According to Articles in the Government Regulation Number 24 of 2012, foreign companies holding mining licenses must divest their shares in stages after five years of production, thus after ten years, minimally 51 percent of their shares must be held by Indonesian parties.
The divestment stages called for are 20 percent up to the sixth year of production, 30 percent by the seventh year or production, 37 percent in the eighth year, 44 percent in the ninth and 51 percent in the tenth year of production.
The Indonesian parties referred to in the regulation may be the Indonesian central, provincial, or district governments, state-owned companies, regional state-owned companies and national private companies.
If the central government is not willing to purchase the divested shares, they would then be offered to provincial or district governments and, if the provincial or district governments chose not to purchase the shares, they would be offered to national or regional state-owned companies through an auction.
Additionally, if the national or regional state-owned companies reject purchasing the shares, they could be sold to private companies during an auction.
Foreign mining companies that violate the divestment rules would be given administrative sanctions ranging from written admonitions to temporary termination to revocation of licenses. (*)
Editor: Aditia Maruli Radja
Copyright © ANTARA 2012
