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US ambassador encourages open communication between government and Freeport

7th March 2017 | 1.740 Views
Jayapura, Papua (ANTARA News) - US Ambassador to Indonesia Joseph R Donovan Jr has encouraged an open communication between the Indonesian government and Freeport McMoRan Inc.

"The open communication is intended to achieve an agreement that is advantageous to both the parties," Donovan said here on Tuesday.

He stated that the shared communication could be a win-win solution.

"We agree on a win-win solution, because it will give a positive signal to foreign investors in the future. The solution also indicates Indonesias competitiveness at the global level." he remarked.

The ambassador will continue to monitor the controversy over a change in the contract status of gold and copper mining firm PT Freeport Indonesia (PFTI).

Under the government regulation 1/2017 on mineral and coal mining, the government would extend the export of concentrate on conditions that contract of work (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.

Following this, President and CEO of US mining giant Freeport McMoRan, Richard C. Adkerson, earlier 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 PTFI has sent a notification on Friday to Energy and Mineral Resource Minister Ignatius Jonan on the governments defaults and violation of the firms CoW.

The government cannot change the CoW signed in 1991 unilaterally by allowing exports only after it changed its status as IUPK, he noted.

"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 remarked, adding that the parent company had not received dividends from PTFI for the past five years.(*)