In Freeport Permit Extension, Hard Questions Emerge

Editorial: In Freeport Permit Extension, Hard Questions Emerge

By Jakarta Globe on 08:57 pm Jun 11, 2015

With Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, agreeing to work under a Special Mining Business Permit, or IUPK, from its current Contract of Work, or KK, the government is set to grant the company a new 20-year permit to continue its operations in Papua.

Under the new arrangement, the miner can renew its permit twice more, for 10 years each time, allowing it to operate in the country’s easternmost province through 2055.

For Freeport, this is great news; it heralds a rare moment of legal certainty.

But Freeport’s KK was due to expire in 2021 and it was only due to request an extension in 2019. That poses big questions: Why the rush to extend four years ahead of time? And why change the nature of the contract itself?

The government is obliged to answer these questions, which have given rise to speculation about all kinds of suspicious dealings.

We have reason to believe that the change of arrangement is just a form of legal manipulation to secure an early extension, in which the current ruling elites pushed for the extension before President Joko Widodo’s term in office ends in 2019.

From that we can conclude with almost near certainty that these elites — be they members of the president’s inner circle or of the ruling coalition — are receiving financial benefits from the extension.
This benefit, if indeed it exists, comes at the expense of state revenue: Under the IUPK, Freeport’s tax rate goes down to 25 percent from the current 45 percent under the KK.

We warn the elites to think about future generations and the harmful consequences that this scheming will have on countless innocents. One day, you will be in their place.

ENDS

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