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Indonesia finalizes contract extension, eyes bigger stake in Freeport

Jakarta Post - November 16, 2023

Jakarta – The Indonesian government said it would complete a contract extension for PT Freeport Indonesia (PTFI) by the end of this month, as it seeks to increase its ownership in the copper and gold mining giant., resident Joko "Jokowi" Widodo met on Monday with Freeport-McMoran CEO Richard Adkerson in Washington, DC, in a show of commitment to supporting the company's operation in Indonesia.

Jokowi, who is on his way to attend the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco, California, said he discussed with Adkerson about PTFI's contract extension and a plan to increase the government's ownership.

"I'm delighted to hear the discussion on a 10 percent increase of [government's ownership] in Freeport Indonesia and the mining permit extension for the next 20 years has reached the final stage," the President said in a statement.

Jokowi said he hoped that "the matters" could be settled by the end of November this year.

PTFI, which has obtained a mining license in Indonesia since in 1967, has been in negotiations with the government to have its contract extended until 2041 to secure its operations, including getting fiscal and regulatory guarantees.

As the Indonesian government has sought more control over the country's mineral resources, the negotiations have included a transfer of ownership to state-owned mining holding company MIND ID, previously known as Inalum, which took place in 2018. Currently, the government controls 51 percent of PTFI's shares, while Freeport McMoRan controls 49 percent.

Regulatory compliance has become a source of dispute between the company and the government recently. As part of its regulation banning raw minerals exports, the government banned copper concentrate shipments from the company between June and July this year.

President Jokowi later issued an exemption for Freeport and another copper miner PT Amman Mineral to export concentrates until May 2024 since both companies were still building smelter facilities to comply with the regulations.

Freeport has started to build a smelter in Gresik, East Java, and during the Washington meeting expressed its intention to build another in Fakfak, West Papua.

The company, however, has planned to challenge an export duty that the government recently implemented, arguing that under its 2018 mining license, no duties are required once its smelter is at least half-complete. The government verified that the company's smelter construction progress had exceeded 50 percent as of this March.

"PTFI is continuing to discuss the applicability of the revised regulation with the Indonesian government and will contest, and seek recovery of, any assessments," a Freeport-McMoran report said regarding its Indonesian unit.

Separately, acting coordinating maritime affairs and investment minister Erick Thohir, who accompanied Jokowi on the US visit, praised the Washington meeting and the deeper ties between Indonesia and the United States, especially in trade.

"We've seen [Indonesia's] trade surplus with the US has reached almost US$16 million, with growth acceleration in the last few years. The US is the country with the fourth largest investment in Indonesia. That has never happened before," he said.

Coordinating Economic Minister Airlanga Hartarto, Foreign Minister Retno LP Marsudi, Energy and Mineral Resources Minister Arifin Tasrif, Indonesian Ambassador to the US Rosan Roeslani and PTFI president director Tony Wenas also joined the meeting that took place at Waldorf Astoria Hotel.

Erick said the critical point that the government was currently negotiating with Freeport was for the welfare of the Indonesian people and he praised the company's commitment to the country.

"We want to continue to increase foreign investment and create jobs in Indonesia," he said.

Source: https://asianews.network/indonesia-finalizes-contract-extension-eyes-bigger-stake-in-freeport