Kadin Urges Government to Promote Smelter Development in Papua

By : Ridwan And Aldi Firhand. A | Tuesday, September 05 2017 - 07:09 IWST

Smelter Illustration
Smelter Illustration

INDUSTRY.co.id - Jayapura- Chamber of Commerce and Industry (Kadin) of Eastern Indonesia (KTI) assesses that the government's position in PT Freeport Indonesia's takeover lobbies is very strong. Therefore, by controlling the majority of shares of PT Freeport, the government should encourage the construction of smelters in Papua.

"The position of the government is very strong and diligent to build KTI, preferably smelter in Papua," said Vice Chairman of Kadin Timur Indonesia H. Andi Rukman Karumpa through his written statement in Jayapura, Papua, Monday (4/9/2017).

Andi said the Minerba Act No. 4 of 2009 did not mention that the location of the smelter should be at the mine site. But with the development of smelters in Papua it can encourage the equity of industry and economic prosperity to the eastern region.

"So, we in the eastern region also need industrialisation. To not all come to the island of Java," he explained.

Furthermore, Andi said, by controlling most of Freeport's shares, the government can control the company's strategic policy, including the smelter development. "The concern of President Joko Widodo is very large for Papua and eastern Indonesia, so he requested that relevant ministries encourage the Freeport smelter to be built in Papua to stimulate industrialization in the underdeveloped region," said Andi.

According to him, this smelter development can be integrated with massive infrastructure development in Papua. "The infrastructure connectivity must be filled with the development of new industrial and economic areas in Papua, so the Freeport smelter is highly relevant," he said.

As is known, currently as much as 40 percent of PT Freeport Indonesia concentrate shipped and absorbed by smelters in Gresik, East Java. In addition, the government is seeking to buy 51 percent of PT Freeport shares.

Under the contract, Freeport does not automatically get an extension for 20 years until 2041, when its contract expires in 2021. Therefore, in order for the contract to continue, Freeport must obtain approval from the Indonesian government. As regulated in Government Regulation number 1 of 2017 on the implementation of mineral and coal mining business activities, each holder of IUPK (Special Mining Business License) shall be entitled to apply for a two-time extension for a period of 10 years.

The Freeport IUPK is valid until 2021 or equal to the validity of Freeport's contract of work. But Andi reminded that the issue of takeover PT Freeport should be managed properly. "The problem is that tens of thousands of mining workers have been laid off," he said.

For more than 90 percent of the regional gross domestic product (PDRB) of Mimika Regency, about 37 percent of GRDP (Gross Regional Domestic Product) of Papua Province comes from Freeport. "I think the impacts of its economy and local politics must also be considered, so we hope it will be well managed," Andi concluded.

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