Friday, April 19, 2024

Govt finalizes revision of regulation for early extension of Freeport permit

Reading Time: 2 minutes
Gusty da Costa

Journalist

Editor

Interview

The Indonesian government is finalizing the revision of Government Regulation No. 96/2021 that will allow PT Freeport Indonesia to secure early extension of its special mining business permit after 2041. 

“It [Freeport’s permit extension] is being finalized, hopefully it will be quick,” Minister of Energy and Miniseral Resources (ESDM) Arifin Tasrif said on Friday, March 22, 2024. 

Arifin cited that the revision is about providing certainty to the mining business. A mining company should know the reserve or resource of a concesion before it starts to spend its money or invest. 

“If it is a large industrial scale, the company must spend a lot of money just like the one in Gresik. It has a large capacity, so they need a lot of ores and concentrates for a long period, so we must ensure it,” he said. 

One point of revision is that a mining company with smelter can submit early extension of their permit or contract at any time considering their huge investments.

“The previous regulation requires a 5-year deadline before the contract or permit expires for a mining company to be able to submit their proposal for permit extension,” Arifin said. 

He said further that after the revision of Government Regulation No. 96/2021, the government will grant the special mining business permit for PT Freeport Indonesia.

“The permit extension will be granted this year for sure, because we have discussed this issue for the last 1-2 years” he added.

PTFI signed the Contract of Work (CoW) in 1976 for 30 years and should have ended in 1997. Before the contract expired, PTFI discovered a bigger gold reserve at Grasberg mine. The company then submitted a second contract extension in 1991. The second contract has a clausal on divestment of 51 percent of the company’s shares to the Indonesian government.

After a long negotiation, in 2018, Freeport-McMoRan announced that it divested its ownership in PTFI so that Indonesia could own 51 percent shares of the company. In return, the CoW was replaced by a Special Mining Business License (IUPK) with the mining right to 2041 and Freeport will build a new smelter by 2022.

Grasberg mine has three mining operations: Open pit, the Deep Ore Zone underground mine and the Big Gossan underground mine. According to former Minister of Energy and Natural Resources, Ignasius Jonan, the Grasberg gold mine has 23.2 million ounces of gold reserves per December 31, 2017.

Gusty da Costa

Journalist

 

Editor

 

Interview

SUBSCRIBE NOW
We will provide you with an invoice for your reimbursable expenses.

Free

New to Indonesian market? Read our free articles before subscribing to the premium plan. If you already run your business in Indonesia, make sure to subscribe to the premium subscription so you won’t miss any intelligence & business opportunities.

Premium

$550 USD/Year

or

$45 USD/Month

Cancelation: you can cancel your subscription at any time, by sending us an email inquiry@ibp-media.com

Add keywords to your market watch and receive notification:
Schedule a free consultation with us:

We’ll contact you for confirmation.

FURTHER READING

Minister of State-Owned Enterprises (SOEs) Erick Thohir has warned the Indonesian SOEs to anticipate the impact of global economic and geopolitical turmoil, citing the US inflation at 3.5 percent as indicator that the Fed would not lower the benchmark interest rate (Fed Fund Rate) in the near future.
President Joko “Jokowi” Widodo has approved the additional state capital injection (PMN) to PT Wijaya Karya (WIKA) amounting to Rp6 trillion (US$419 million).
PT Freeport Indonesia (PTFI) has deposited around Rp3.35 trillion (about US$207 million), or about sevent percent out of its 2023 profit of Rp48.79 trillion, to the regional administrations in Papua.
The Coordinating Ministry for the Economy held a coordination meeting with all Deputy Ministerial elements along with the Ministry of Foreign Affairs and several Ambassadors on Monday, April 15, 2024 in response to developments in the Middle East conflict following Iran’s retaliatory offensive against Israel. 
The textile and textile product (TPT) industry asks all stakeholders to comply with import restriction policies as regulated in Minister of Trade Regulations No. 36/2023 and No. 3/2024 on Import policy and control. 
The government has spoken out regarding Indonesia’s stance on Iran’s recent attack on Israel, asking the United Nations Security Council (UNSC) to take swift action to de-escalate tensions in the region.