- VIVAnews/Ikhwan Yanuar
VIVAnews - PT Freeport Indonesia is willing to increase the royalty with respect to the renegotiation of mining work contract. The mining company expected the government to invite Freeport for a discussion in an effort to find the solution to the issue.
President Director of Freeport Indonesia, Rozik B Soetjipto, said the government has been informed of the company's readiness in improving the mining concession signed in 1991.
“The concession attaches a clause which specifies that a review is possible, whether from the government or the investor,” Rozik told VIVAnews.
Rozik said the gold royalty in the previous contract has a small portion as when the concession was signed gold was a secondary product at 1 percent. The main mineral in the second concession's royalty is copper.
Initially, Freeport Indonesia found it difficult to report this renegotiation issue to its majority shareholder, Freeport-McMoRan Cooper & Gold (FCX).
“We always used to say lex specialis on the concession concerning such items as financial obligations, area, permanent time period or nail down during the signing of the contract, except for manpower and the environment which follow changes,” he said.
However, Rozik was able to convince the principal party for a renegotiation.
“Our task is to explain to the principal party that the situation has changed and we must follow the government’s demand. If we want to continue report until 2041, then we must renegotiate,” said the former Minister of Public Works.
“Royalty is not an issue. However, we haven’t informed this yet because the government hasn’t summoned us,” he said.
The company is still waiting for the government’s decision on whether or not it will implement all new policies in the Law No.4/2009 on Mining for Freeport’s new contract. At the moment, Freeport pays 1 percent gold royalty and 1.5-3.5 percent copper royalty.
However, he said if the government still uses the royalty figure set in the Law, then Freeport’s tax to the State would be reduced.
“In terms of tax, the corporate tax was 35 percent. Now it’s only 25 percent. If now we stand by all new policies of Law No.4/2009, Freeport would pay less,” he said.
“We are ready to raise the royalty. However, the government should see it from the tax point-of-view,” he said.
“Maybe the government does not want to reduce the tax, but wants to increase the royalty. We don’t know this yet. But it’s a part of the discussion,” he said.
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