Friday, June 12, 2015

US GOLD AND COPPER MINING FREEPORT IDONESIA, PAPUA WOULD EXTENDED?


                                          
 

"The government will decide whether or not to extend its contract with gold and copper mining firm PT Freeport Indonesia before July 25, 2015, according to Energy and Mineral Resources Minister Sudirman Said. "There will be a decision on the continuation of Freeports operations before July 25," he said here on Friday.

Said Didu, the head of the ministry’s newly established team for the assessment of the capacity of national smelters, also argued that certainty over operation continuity would be necessary for the realization of billions of dollars worth of investment in smelting facilities in the country.
- See more at: http://www.thejakartapost.com/news/2015/02/23/govt-revise-regulation-allow-freeport-operation-certainty.html#sthash.5HAAhLEG.dpuf
Said Didu, the head of the ministry’s newly established team for the assessment of the capacity of national smelters, also argued that certainty over operation continuity would be necessary for the realization of billions of dollars worth of investment in smelting facilities in the country.
- See more at: http://www.thejakartapost.com/news/2015/02/23/govt-revise-regulation-allow-freeport-operation-certainty.html#sthash.5HAAhLEG.dpuf
Said Didu, the head of the ministry’s newly established team for the assessment of the capacity of national smelters, also argued that certainty over operation continuity would be necessary for the realization of billions of dollars worth of investment in smelting facilities in the country.
- See more at: http://www.thejakartapost.com/news/2015/02/23/govt-revise-regulation-allow-freeport-operation-certainty.html#sthash.5HAAhLEG.dpuf
Freeports contract will expire in 2021, which means the subsidiary of US-based giant miner Freeport-McMoRan Inc. can apply for an extension of its contract only in 2019 at the earliest.

One of the matters the government will consider before deciding to extend the contract is Freeports plan to invest US$17.3 billion as it still needs certainty, he noted.
Sudirman said that Freeport had been hand over a proposal of contract extend that due in 2021 with additional huge Investment US$ 17,3 billion for gold mining in Papua and Smelther in Gresik. East Java.


Origin of papua people

In the 2nd contract for 30 years, Indonesia Government got a relatively small portion 1-3,5% royalty. But Government honored the contract and try to negotiate more royalty before the due time. Foreign investors don't worry too much as long as the company did their obligation as contract written.

Resource nationalists in Indonesia have been pushing for a renegotiation of Freeport’s contract that expires in 2021 and was previously extended on the orders of a former dictatorship. Freeport insists that it pays handsomely in taxes and royalties and meets all its contractual and social obligations, both to the central government in Jakarta and to local communities around Grasberg.





 Freeport’s Indonesian mine has such rich gold and copper deposits, and low costs of recovery, that it can keep digging profitably for decades. But the next phase will be underground, not the open-pit mine that defined Freeport’s early success. It has been investing $600 million a year in a vast network of tunnels, burrowing deeper into the mountainside. Around one-third of the ore that it crushes and sends via pipeline to its port already comes from underground mining.
 By 2016, open-pit operations are due to finish. The key question is whether Freeport’s investment is secure at the terms that it currently enjoys.

Freeport also agreed to "provisions" to increase the stake in the local unit held by the Indonesian government and nationals to 30% from the current 9.36%. Freeport currently controls a 90.64% stake.

The deal represents a victory for Indonesia, which has tried to gain greater control of its vast natural resources and milk more in taxes and royalty payments from foreign miners and investors. Freeport Chairman James "Jim Bob" Moffett said the agreement would "enable continuing benefits of the Grasberg operations for the government, the local communities in Papua, our large Indonesian workforce and our shareholders."


The certainty of Freeport’s future will be determined soon. […] If necessary, the government regulation will be revised. It is unrealistic that a request for an operation involving huge investment be made just two years before expiry. Even in oil and gas, we give a 10 year period,” Sudirman told reporters on Friday. - See more at: http://www.thejakartapost.com/news/2015/02/23/govt-revise-regulation-allow-freeport-operation-certainty.html#sthash.5HAAhLEG.dpuf

Sudirman said the revision of the regulation would take place soon and that the ministry expected to create a new regulation before July 25, the expiry date of a memorandum of understanding (MoU) between the government and Freeport Indonesia.
- See more at: http://www.thejakartapost.com/news/2015/02/23/govt-revise-regulation-allow-freeport-operation-certainty.html#sthash.wxsAr7eB.dpuf






Indeed, Freeport Indonesia is worried that it will not be granted a permit to operate after 2021.

Interruption of its operations will render the company unable to enjoy a pay-back period for its around US$17 billion investment in underground mining.
- See more at: http://www.thejakartapost.com/news/2015/02/23/govt-revise-regulation-allow-freeport-operation-certainty.html#sthash.wxsAr7eB.dpuf
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