President Joko Widodo said today that he will let Energy and Mineral Minister Ignasius Jonan take care of the ongoing dispute between the government and PT Freeport Indonesia.
For now, let the minister deal with it, he said today. We want to find a win-win solution, because its business. But if theyre hard to discuss and negotiate with, I will take action.
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The dispute started after Indonesian government published a new regulation on Jan. 11 stating that mining companies with special permit (IUPK) owned by foreign companies should divest their stock to 51 percent gradually.
The new regulation was rejected by Freeportthat has been mining in Papua for more than 48 years. The company would only let go 31 percent of their stock.
Previously, Freeporthas also been disputing with the government over a regulation that states Freeport'sstatus should be changed from Working Contract to IUPK.
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Freeport McMoran, Freeports holding company, CEO Richard Adkerson said in a press conference on Monday that Freeportis still in negotiation of the status change policy when the government impose a further restriction.
Adkerson said the government cannot force the company to change its status and it needed six months to discuss. They already signed an agreement with the government in October 2015 to give Freeportpermission to continue exporting concentrate during the negotiation process.
Changing Freeports status from Working Contract to IUPK would mean the company will follow the new and ever-changing tax rate, while with the first status, the company has a fixed rate tax until the end of contract.
With the latest Jan. 11 policy, an IUPK would also need to divest its stock by 51 percent. Since Freeportrejected the policy, its concentrate export has been halted since Jan. 12.
Adkerson said that the company has to let go its contract employees as their operation has to be halted as well.
He also said that Freeporthas sent a letter to Energy Minister Ignasius Jonan regarding the governments violation of agreement and that the company would fight Indonesian government in international court should the negotiation between them does not conclude in the next 120 days since Feb. 17.
Feisty Ignasius Jonan
Energy and Mineral Minister Ignasius Jonan would not budge despite the threat.
Do you know how much income we get from cigarette tax? Rp 139.5 trillion a year. Freeport only gave Rp 8 trillion, why are they so whiny? Jonan said on Tuesday.
Before I handle the energy ministry, I thought Freeport is an elephant, turns out its only a cow. Even Exxon, who deals with a quarter of Indonesias oil production, and Chevron, who makes 35 percent of National oil production are not that whiny.
He also added that Freeport is not as big as they think they are as its valuation only reaches USD 20 billion worldwide, while state-owned telecommunication company Telkoms reaches USD 29 billion and Bank Rakyat Indonesia (BRI) reaches USD 21 billion.
Freeport is not big anymore. Its not defamation, its a fact, he said.
Support for Jonan
Jonans bold gesture towards Freeport has been creating a wave of support.
Papua Governor Lukas Enembe expressed his support to governments intention to buy the majority of PT Freeport Indonesias stock.
We agree if the state (wants to) take 51 percent of Freeport, because foreign (companies) ruling our economic sector has made us left behind, he said to reporters on Tuesday in Jayapura.
If we have 51 percent of stock, Freeport will be the employee as they only have 49 percent. After mining for 48 years in Papua, its time for them to follow our law.
Head of Commission IV of House of Representatives (DPR) Satya Yudha said that the government should be bold if they want to take the case to international court.
Weve won before when Newmont sued us. The state should be sovereign. We have to be bold, he said on Sunday to reporters.
Kurtubi, a member of the Houses energy commission, suggested that the dispute should be settled outside the court and Freeport to learn Indonesias new policy on special mining business permit. Taking the case to the court, according to Kurtubi, might end up in a massive layoff that will harm the Papuan people.
Meanwhile, internet users also send their support to the government. Besides numerous support posts praising the governments effort, there is also a petition launched two days ago has gathered more than 2,300 signatures to support government to fight Freeport.