Hatta Wishes Renegotiation Of Working Contracts To Finish In 2012

Jakarta, July 24 (ANTARA) - Chief economic minister Hatta Rajasa wished renegotiation of working contracts with mining companies could be finished in 2012. "I wish it could finish this year," he said when met for information on the issue here on Monday. He said the process of negotiation had shown progress as several companies had agreed to increase royalties, reduce land exploitation, build smelters and increase the use of local resources. "They have also been ready to conduct divestment but no figure has been settled. I have also asked them to conduct an IPO and they have agreed," he said. He declined to tell how far the progress of negotiation has gone but he assured that the government would strive maximally to increase state revenues through mining companies. "Our interest which is a national interest is to increase state revenues as high as possible," he said. He explained minimally there are six points currently still being negotiated namely the width of mining working area, contract extension, state revenue through royalty, divestment obligation and obligation to use domestic mining goods and services. Hatta said renegotiation with PT Freeport Indonesia has also shown a progress but disagreement still remains with regard to royalty and divestment figures. "Good progress has been made with PT Freeport," he said. At present 90.64 percent of PT Freeport Indonesia`s shares is held by Freeport McMoran Copper & Golden Inc. while the Indonesian government holds 9.36 percent. Freeport`s obligation to divest its shares is regulated in Article 24 of the extended working contract of 1991 stating Freeport`s obligation to divest in two stages. In the first stage Freeport is obligated to divest 9.36 percent of its shares to the Indonesian government in the first 10 years after 1991 while the second stage obligating Freeport to divest two percent a year starting in 2001 until national share holdings reaching 51 percent. The first obligation has already been carried out. In 1991 the gold and copper mining company has released 9.36 percent of its shares to the country through PT Indocopper Investama. However the second divestment obligation was aborted following the issuance of Government Regulation Number 20 of 1994 allowing foreign ownership up to 100 percent.