• Tuesday, 17 July 2018

The Freeport Twist

freeport, Dirjen ESDM

Recently, Minister of Energy and Mineral Resources Sudirman Said stated that a member of parliament and a businessman had met for several times with one of the Freeport leader. It was discovered that during the meeting, a member of house of parliament (DPR) was askid for a 20% share for President Joko Widodo and Vice President Jusuf Kalla. In return, the member of parliament (MP) asked for 49% shares hydropower plat Urumka in Papua and asked Freeport to buy electricity from the hydroelectric power.

Against this statement, on November 13th, Police Chief Badroin Haiti response to that his authority is focused on security Election in the end of 2015. “Not need to respond Minister of Energy and Mineral Resources because there is no report. Not need to be explored,” he said. Before, Vice President Jusuf Kalla expressed that he is angry that an MP had abused his name, but he himself did not give further statement.

Until November 16th, Sudirman reported this MP meeting with the Freeport to the tribunal honor of House of Representatives without mentioning a name. After this reporting, the media starts dug again a long history of Freeport with Indonesia.

Freeport had run with Indonesian government side contract and start to use different legal basis. Freeport Indonesia strongly holding Article 24 Paragraph 2 Letter a and b which reached the work contract 1991 as the legal basis divest shares to the Indonesian side through the initial public offering (IPO) in the stock market.

Meanwhile, the Directorate General of Minerals and Coal, Ministry of Energy Secretary and Mineral Resources (ESDM) determined that divest cannot be done through trading market share capital. The Director General Bambang Gatot Ariyono said he expert to stay on Minister of Businesses, Mineral, and Mining regulation (PP) Number 77 in 2014 of mineral and mining business.

Freeport is the first international mining company in Indonesia. This company began to operate in Mikika region, Papua Province since 1967. One of Freeport business named McMoRan inc. from the United States recorded as the largest gold producer in the world. In 1991, wide area of Freeport is about 2,6 millions Ha. This reduced more than two millions Ha in 2012 to 212.950 Ha. It means, it has been smaller four times the original territory, more or less 75% have been returned to the government.

In 1988 Freeport found gold, copper, and silver for 100 million tons then legalizing 2nd work contract between two parties, the Freeport and Indonesian government along 30 years until 2021. The possibility of extra is 2 x 10 years until 2041. In 1993, Freeport again found new Grasberg reserve by two metric tons. In accordance to their obligations, Freeport had built smelter or mineral purification factory on Gresik as a prerequisite raise production and exports in 1996.

Two years later, the company also found Grasberg reserve of two metric tons. In 2006, Freeport production reached 246.000 tons per year. Freeport plan additional investment by 16 billion dollars to 18 billion dollars to the development of mine underground to front.

Freeport work contract done after the company do his bidding sale of a stake through the stock exchange or and other means to Indonesian. Stock exchange sale will reach 10 percent of company capital in the fifth year contract in 1996 or maximal in the year to ten year contract in 2001. Ten years since 2001, Freeport had offer to sell two and a half percent of the shares a year in a stock exchange or with the other way to the Indonesian.

After all sales of stocks companies, the government had 45% of the company with the provisions of 20% was through stock exchange. In the 20th century in 2011 after the second contract signed, Freeport take stock until a number of 50% to Indonesian government.

In accordance work contact (1967 to 1968) giving official permission mine 30 years, Freeport required to pay the tax and tuition fixed amount 0,025 US dollar to 3 US dollars per hectares, royalty 4% for copper, 3.75% for gold, and 3.25% for silver. In addition tax of income tax agency 35%, taxes and local charges, and charges and tax liability. Freeport also has an obligation dividends targeted by the government 1.5 trillion per year. But since 2012, Freeport never deposits dividends to the central government.

Grace Eldora

Grace Eldora Sinaga is a journalistic practitioner, graduated from Faculty of Communication Study Majoring Journalism, Unpad. She loves to learn Asian cultures and photography. She can be contacted at gracel@buminawa.com or twitter @glaceldo.