JAKARTA (TheInsiderStories) - The Indonesian Energy and Mineral Resources Ministry(MEMR) has approved the change of mining contract of PT Freeport Indonesia and PT Amman Minerals Nusatenggara, from Contract of Works (CoWs) into Special Mining Permit (IUPK), as required by the Government Regulation (PP) No. 1/2017 and prevailing laws. The approval paves the way for the two mining companies to export its ores and concentrates.
“Today, the MEMR) has approved the change of the contract of PT Freeport Indonesia and PT Amman Minerals Nusatenggara from Contract of Works (CoW) to IUPK. This has become an important milestone of the PP No.1/2017,” Secretary General of MEMR M. Teguh Pamudji said at a press conference.
“Based on evaluation undertaken (by the MEMR) in line with the Ministerial Decree No. 05/2017, MEMR has decided to approve IUPK for the two companies. The companies will then are eligible to submit export permit as quick as possible ” he said.
The government recently issued a government ruling (PP), which among other, required mining companies to change the CoWs into IUPK, as mandated by the mining law. The change is a prerequisite for companies in order to obtain approval to export unprocessed minerals for certain period, while they are developing smelter.
“As a result of the change of CoW into IUPK, the two mining companies are required to perform their duties in accordance with the IUPK,” added Teguh Pamudji.
He added the Energy and Mineral Resources Ministry has undertaken comprehensive assessment before awarding the approval.
Following the changes of the contract scheme to IUPK, Freeport Indonesia is still allowed to pay royalty of 1%, lower from 3.75% usually imposed on contract extension. Freeport’s contract will expire in 2021, while Amman Minerals’ contract will expire in 2028.
In order to get permit to export unprocessed minerals, the miners are required to change the CoW into IUP or IUPK; make a statement that they will build smelter within 5 years; extension of contract will be processed separately; and must show commitment to divest shares up to 51% as required by the prevailing laws.
Meanwhile, nickel producer PT Vale Indonesia Indonesia Tbk (IDX:INCO) has decided to maintain the status of the contract of work (COW) until the contract expires. Vale Indonesia will maintain the status KK until the time runs out in 2025. Thereafter, the company INCO coded share in the Indonesia Stock Exchange plans to change the status of new families into a special mining license (IUPK). (*)