Monday, 3 Zulqaidah 1439 / 16 July 2018

Monday, 3 Zulqaidah 1439 / 16 July 2018

Mail from Freeport to finance ministry leaks to the public

Jumat 29 September 2017 22:11 WIB

Rep: Eko Supriadi/ Red: Reiny Dwinanda

CEO Freeport McMoran Inc Richard C. Adkerson

CEO Freeport McMoran Inc Richard C. Adkerson

Foto: Republika/Prayogi

REPUBLIKA.CO.ID, JAKARTA -- After making an uproar by the leak of important letter on PLN's potential failure to pay debts, the Finance Ministry made another surprise by another similar case. The mail from Freeport Indonesia to the Secretary General of Finance Ministry Hadiyanto dated September 28 also leaked to the public.

The letter contains Freeport's respons to reject the divestment agreement reached on August 29

"We have received the Government' position on the divestment dated September 28, 2017. We strongly disagree with the statement included in the document and submit our response and clarification of the inaccuracie contained in the Government's position," CEO Freeport McMoran Inc Richard C. Adkerson said in the viral mail.

Describing government position, Freeport said based on Article 24 number 2 of the Contract of Work (COW) the shares divestment until the ownership of Indonesian participants reaches 51 percent should have been completed in 2011, therefore the implementation of this divestment is an implementation of postponed  PTFI's divestment obligation.

Adkerson also stated the government of Indonesia has the final capacity to take over all divested shares within the proposed divested period, which is at the latest is until the end of 2018.

Furthermore, Adkerson said, PTFI has agreed to discuss with the government the timeframe for completing the divestment. Freeport has proposed that the initial divestment take place in stages over a period of tears similar to the timeframe completed under government regulation.

Written in underline, Adkerson said there are no current divestment obligations under the PTFI COW.

Adkerson explained, the Article 24 indicates that: "If after the signing of this agreement then effective laws and regulations or government policies or action impose less burdensome divestiture requirements than set forth herein, such less burdensome divestiture requirements shall be applicable to the parties to this Agreement.

According to Adkerson, Freeport adopted less burdensome divestment requirements of Government Regulation No. 20 of 1994, which revised the requirement for Indonesia ownership to 5 percent was later modified to allow for up to 100 percent total ownership.

PTFI also objected to the calculation of shares based on the profit earned only until 2021. Meanwhile, PTFI insisted that any divestment must reflect the fair market value of the business through until 2041, using international standards for valuing mining business, all of which is consistent with  the rights of the Contract of Work .

'' Freeport has contractual rights to operate until 2041, '' Adkerson asserted.

Adkerson cited Article 31 of COW, "Freeport has initial term of 30 years from the date of signing of the agreement  and entitled to apply for two successive ten year extensions of such term."

Furthermore, Freeport has invested $14 billion to date and plans to invest an additional $7 billion in underground development project through 2021, which benefit the operation through 2041.


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