REPUBLIKA.CO.ID, JAKARTA -- The Indonesian government plans to extend the operation permit of gold and copper mining company PT Freeport Indonesia in Papua province for another 20 years.
The plan was made after PT Freeport agreed to expedite the change from a contract of work (KK) system to a special mining permit (IUPK) system before its contract expires in 2021, Head of the Public Communication Center of the Energy and Mineral Resources Ministry Dadan Kusdiana said at a press conference here on Wednesday.
"With the change in system from KK to IUPK, Freeport's operations can be extended for another 20 years," he stated while disclosing the outcome of a meeting between Energy and Mineral Resources Minister Sudirman Said and Freeport.
If the IUPK can be expedited in 2015 and Freeport's operations are extended for another two decades, its contract will expire in 2035, he added.
Among those present at the meeting were Chairman of Freeport McMoRan Inc James R. Moffet and President Director of Freeport Indonesia Maroef Syamsuddin.
According to Kusdiana, Freeport's operations may be extended after 2021 because the U.S. mining giant needs capacity before it makes an investment.
Freeport plans to invest US$17.3 billion---US$15 billion for underground mining and infrastructure and US$2.3 billion for a smelter. The company is expected to start realizing this investment plan this year, and the return on investment will take longer than when Freeport's contract will expire in 2021.
Kusdiana further noted that the expedited change in the system of management was a legal breakthrough in accordance with law number 4/2009 on mineral and coal mining. Under the law, any application for the extension of operation must be filed two years before the contract expires.
In addition, article 169b of the law stipulates that all KK systems must be altered into IUPK systems.
Freeport, whose contract expires in 2021, can file an application for the extension of its operations only in 2019, according to the law.
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