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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Nando Narendra
Freeport Indonesia.
The extension of PT Freeport Indonesia’s (Freeport) contract of work (kontrak karya - KK) has again been thrust into the spotlight, as the current scandal involving Setya Novanto, the Speaker of the House of Representatives (House), plays out in the country’s media. The scandal itself is currently being dealt with by the House’s Honorary Council.
Kardaya Warnika, Chair of House Commission VII, has asserted that most parties still misunderstand the renegotiation process as regards Freeport’s KK. Warnika is of the belief that the renegotiation process has no legal grounds whatsoever, due to the fact that Freeport never properly negotiated its KK in the first place.
“No legal basis for renegotiation is set out under the current Mining Law,” explained Mr. Warnika during a discussion event entitled, “Freeport’s Dramaturgy,” which was held in Jakarta on Saturday, 12 December 2015.
Mr. Warnika further explained that according to Article 169, part (b) of the Mining Law, all KK and Coal-Mining Agreements (PKP2B) had to be converted from a contract or agreement-based regime to a licensing regime. Freeport’s KK, which is due to expire in 2021, remains a valid contract, however the Mining Law obliged each and every KK and PKP2B to be renegotiated within a year of the effective enforcement of the 2009 Mining Law, and this stipulation included Freeport’s KK.
“Both KKs and PKP2Bs are open for extensions, although this process has to be in full compliance with the prevailing laws and regulations. In fact, all KKs and PKP2Bs had to be renegotiated within one year at the latest of the mining law coming into force, so that meant in 2010,” asserted Mr. Warnika.
Mr. Warnika further revealed that in 2010, one year after the current Mining Law came into force, Freeport had still not negotiated an adjustment to its KK as prescribed under the current legal framework. This is the main reason why the so-called “KK renegotiation” for Freeport does not sit well with Mr. Warnika.
“There was no adjustment in 2010, so why has the renegotiation only come up for discussion now? What renegotiation? And on what basis?” Mr. Warnika asked.
Mr. Warnika also emphasized that renegotiation was no longer applicable under the current Mining Law, and thus the idea that renegotiation will lead to an extension of Freeport’s KK is a misunderstanding of the legal position. According to the Mining Law, a KK or PKP2B must be converted, for example into a special mining license (IUPK). Furthermore, this change of regime also implies that KKs and PKP2Bs are not open for any further extensions.
Mr. Warnika explained that a contract- or agreement-based regime had different characteristics from a license-based regime. A contract- or agreement-based regime, such as Freeport’s KK, had to be based on negotiations, whereas the current license-based regime, on the other hand, no longer involved any negotiations, Warnika clarified.
“Do remember that licenses are different from contracts, which can be based upon negotiations. Licenses however are not based upon negotiations,” Mr. Warnika elucidated.
Ladjiman Damanik, the Executive Director of the Indonesian Association of Mineral Entrepreneurs (Asosiasi Pengusaha Mineral Indonesia – APEMINDO) was also present at the discussion event and offered his opinion on the matter in hand, stating that the enforcement of the Mining Law had to be carried out firmly and correctly. Mr. Damanik asserted that in the case of Freeport, the provisions set out in the Mining Law, which replace the contract or agreement-based regime with a license-based regime, had not been fully or appropriately enforced.
As a result of this lax enforcement of the mining law, APEMINDO’s members believe that they have been treated unfairly and that Freeport enjoys preferential treatment.
“The government should simply tell Freeport to take it or leave it. It is important that the government upholds and complies with all of the country’s prevailing laws and regulations,” concluded Mr. Damanik.
Courting Controversy
It is well known that the extension of Freeport’s KK has been the subject of heated debate for a considerable length of time. According Government Regulation (PP) No. 77 of 2014 (PP 77/2014), the third amendment to PP No. 23 of 2010 on the Implementation of Mineral and Coal-Mining Business Activities, an extension can only be applied for two years prior to a KK’s expiration date at the soonest.
According to Article 112B (2) of the PP 77/2014, two years prior to the 2021 expiration date of Freeport’s KK would fall in 2019. However Mr. Warnika asserts that it is not prohibited for Freeport to apply for an extension before 2019.
“As with a store that only opens for business at six o’clock, of course people are allowed to queue-up in front of it from three o’clock, despite the fact that it is not yet open,” concluded Mr. Warnika.
(sp)
Marcell Sihombing, Nando Narendra
Freeport Indonesia.
The extension of PT Freeport Indonesia’s (Freeport) contract of work (kontrak karya - KK) has again been thrust into the spotlight, as the current scandal involving Setya Novanto, the Speaker of the House of Representatives (House), plays out in the country’s media. The scandal itself is currently being dealt with by the House’s Honorary Council.
Kardaya Warnika, Chair of House Commission VII, has asserted that most parties still misunderstand the renegotiation process as regards Freeport’s KK. Warnika is of the belief that the renegotiation process has no legal grounds whatsoever, due to the fact that Freeport never properly negotiated its KK in the first place.
“No legal basis for renegotiation is set out under the current Mining Law,” explained Mr. Warnika during a discussion event entitled, “Freeport’s Dramaturgy,” which was held in Jakarta on Saturday, 12 December 2015.
Mr. Warnika further explained that according to Article 169, part (b) of the Mining Law, all KK and Coal-Mining Agreements (PKP2B) had to be converted from a contract or agreement-based regime to a licensing regime. Freeport’s KK, which is due to expire in 2021, remains a valid contract, however the Mining Law obliged each and every KK and PKP2B to be renegotiated within a year of the effective enforcement of the 2009 Mining Law, and this stipulation included Freeport’s KK.
“Both KKs and PKP2Bs are open for extensions, although this process has to be in full compliance with the prevailing laws and regulations. In fact, all KKs and PKP2Bs had to be renegotiated within one year at the latest of the mining law coming into force, so that meant in 2010,” asserted Mr. Warnika.
Mr. Warnika further revealed that in 2010, one year after the current Mining Law came into force, Freeport had still not negotiated an adjustment to its KK as prescribed under the current legal framework. This is the main reason why the so-called “KK renegotiation” for Freeport does not sit well with Mr. Warnika.
“There was no adjustment in 2010, so why has the renegotiation only come up for discussion now? What renegotiation? And on what basis?” Mr. Warnika asked.
Mr. Warnika also emphasized that renegotiation was no longer applicable under the current Mining Law, and thus the idea that renegotiation will lead to an extension of Freeport’s KK is a misunderstanding of the legal position. According to the Mining Law, a KK or PKP2B must be converted, for example into a special mining license (IUPK). Furthermore, this change of regime also implies that KKs and PKP2Bs are not open for any further extensions.
Mr. Warnika explained that a contract- or agreement-based regime had different characteristics from a license-based regime. A contract- or agreement-based regime, such as Freeport’s KK, had to be based on negotiations, whereas the current license-based regime, on the other hand, no longer involved any negotiations, Warnika clarified.
“Do remember that licenses are different from contracts, which can be based upon negotiations. Licenses however are not based upon negotiations,” Mr. Warnika elucidated.
Ladjiman Damanik, the Executive Director of the Indonesian Association of Mineral Entrepreneurs (Asosiasi Pengusaha Mineral Indonesia – APEMINDO) was also present at the discussion event and offered his opinion on the matter in hand, stating that the enforcement of the Mining Law had to be carried out firmly and correctly. Mr. Damanik asserted that in the case of Freeport, the provisions set out in the Mining Law, which replace the contract or agreement-based regime with a license-based regime, had not been fully or appropriately enforced.
As a result of this lax enforcement of the mining law, APEMINDO’s members believe that they have been treated unfairly and that Freeport enjoys preferential treatment.
“The government should simply tell Freeport to take it or leave it. It is important that the government upholds and complies with all of the country’s prevailing laws and regulations,” concluded Mr. Damanik.
Courting Controversy
It is well known that the extension of Freeport’s KK has been the subject of heated debate for a considerable length of time. According Government Regulation (PP) No. 77 of 2014 (PP 77/2014), the third amendment to PP No. 23 of 2010 on the Implementation of Mineral and Coal-Mining Business Activities, an extension can only be applied for two years prior to a KK’s expiration date at the soonest.
According to Article 112B (2) of the PP 77/2014, two years prior to the 2021 expiration date of Freeport’s KK would fall in 2019. However Mr. Warnika asserts that it is not prohibited for Freeport to apply for an extension before 2019.
“As with a store that only opens for business at six o’clock, of course people are allowed to queue-up in front of it from three o’clock, despite the fact that it is not yet open,” concluded Mr. Warnika.
(sp)