- VIVAnews/Banjir Ambarita
VIVAnews - The government continued seeking renegotiation of mining contracts, including contracts with PT Freeport Indonesia and PT Newmont Nusa Tenggara, aiming for the greatest prosperity of the people.
Director General of Mineral and Coal at the Energy and Mineral Resources Ministry, Thamrin Sihite, said the contract renegotiation covers six points, namely area width, royalties, divestment, national service, and time period. "We have to persuade the mining contractors," Thamrin said.
The government, he said, also aimed the renegotiation to make the mining companies pay the royalties accordingly. Based on Government Regulation No.13 of 2000, the royalty rate for copper is 4 percent, gold 3.75 percent, and silver 3.25 percent. "The Government wants the maximum prosperity of the people," he said.
Oil and mining observer Kurtubi welcomed this renegotiation plan. To him, so far, the management of mining has diverted away from the law. "The State Budget’s revenue from general mining is still relatively very small. Whereas the number of export production and the price of mining commodities are very high," he said. "Therefore the amount of royalties should be renegotiated to be fairer and in accordance with the constitutional mandate."
He explained that the management of general mining still utilizes the work contract model. This is despite this contract model is a continuation of Dutch colonial concession system based on the 1899 Indische Mijnwet.
Later, he added, under Law No. 4 of 2009 on the Mining Minerals and Coal, it is still possible to amend the work contracts and coal contracts of works (PKP2B) under Article 169 B and Article 171," he said.
Thus, for Kurtubi, mining management is entirely in the hands of investors. Meanwhile the government does not have either the tools or mechanisms to control the production, cost, selling price, and marketing of mining products.
"Compare this with the model of production sharing contract in oil and gas sector, where the state obtains 85 percent share. So the state has a tool or a control mechanism (by upstream oil and gas regulator, BP Migas) over all investors," said Kurtubi.
Member of House Commission VII, Tirta Chandra Wijaya, in a seminar on Mining Contract renegotiation, in the Parliament Building, Jakarta, Thursday said that the government’s revenue from taxes, royalties, and dividends of mining companies are still very small. Of PT Freeport Indonesia for example, it is much lower than what this U.S. company gained.
He said since 1996 the government has only received US$479 million, while Freeport received US$1.5 billion. Then, in 2005, the government obtained US$1.1 billion and Freeport’s gain reached US$4.1 billion.
According to him, Freeport has so far given only one per cent royalty for gold, and 1.5 to 3.5 percent for copper. "These amount of royalty are much lower than other countries which are usually 6 percent for copper and 5 percent gold," he said.
Freeport’s Response
As regards this plan of work contract renegotiation, the government claims, 65 percent mining companies have conveyed a commitment to be ready. "Freeport and Newmont (PT Newmont Nusa Tenggara) have not," Thamrin said.
However, the government still tried persuasively to invite these two mining companies for renegotiation.
In response, Freeport said it would remain respecting and abiding by the terms of the contracts signed by government and Freeport in December 1991.
Freeport spokesman Ramdani Sirait, in an email to VIVAnews.com stated that the company has conducted operations in Indonesia for more than four decades.
"Our contribution to the government has reached 12 billion Australian dollars (about Rp107 trillion)," he said. "We will consistently honor all existing contracts."
With such contributions, Freeport which manages Grasberg mining, Timika, Papua, is certain that the 1991 contract is fair enough for every party, including the government. In fact, he says, when compared with other main mineral producing countries in the world, Indonesia is still lucky. Meanwhile, Newmont has not given an official answer to this affair.
Translated by Indah Lestari
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