Indonesia wants hihger royalties from Freeport
Indonesia wants hihger royalties from Freeport
JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto said on Monday that the government was seeking to
obtain higher royalties from copper and gold producer PT Freeport
Indonesia.
Kuntoro said the ministry was currently negotiating with
Freeport, which is exploiting one of the world's largest copper
and gold reserves in the Grasberg area in the easternmost
province of Irian Jaya.
"The negotiations are underway right now," Kuntoro told
journalists at Merdeka Palace after a meeting with President B.J.
Habibie.
Kuntoro was accompanied by State Minister of the Empowerment
of State Enterprises Tanri Abeng.
Kuntoro said the government made the request because
Freeport's copper output had been on the increase and the price
of copper was also rising.
But he did not reveal the amount of royalties being requested
or specify whether the government was seeking higher royalties
from Freeport's gold mine as well as its copper production.
Under the current contract of work (COW), Freeport has to pay
the government 1.5 percent of its copper sales in royalties if
the price of copper is US$0.90 or less per pound.
The royalties will rise to between 1.5 percent and 2.5 percent
of sales if copper prices range between $0.90 and $1.10 per
pound.
Freeport must pay 3.5 percent of sales to the government if
the price of copper is more than $1.10 per pound.
Under the same contract, Freeport pays the government 1
percent of its gold and silver sales in royalties.
Kuntoro said the President during the meeting had asked him to
maintain the conducive investment climate and the country's good
image for investment.
"The most important thing is that in the current situation, we
want to invite investors and create a workable climate for those
who have come."
Chairman of the United States mining giant Freeport McMoRan
Copper & Gold James Moffett held a three-hour meeting with
Habibie on Saturday, raising speculation that he was launching a
high-level lobby to support Freeport's operations.
Freeport has been applying for the government's approval to
boost its daily ore output to 300,000 tons from 160,000 tons at
present.
Kuntoro has so far refused to approve the expansion plan
despite the fact that Freeport has received an environmental
impact analysis certificate from the environment ministry and has
invested a lot of money in the expansion plans.
Several analysts have speculated that Kuntoro might approve
Freeport's expansion plan in exchange for higher royalties from
the company's operations. (jsk/prb)