AMERICAN mining giant Freeport-McRoRan Copper & Gold may soon pull out of Indonesia after more than four decades due to prolonged conflict with the government. The company, which is the country’s oldest international investor and largest taxpayer, has been embroiled in a battle with President Joko “Jokowi” Widodo’s administration over new national mining regulation.
Legislation introduced in January 2017 requires Freeport to convert its business contract into a special mining licence, dictating the company must divest 51 percent of shares in its local subsidiary within a decade and build a new US$2 billion smelter.
With economic nationalism a key aspect of Jokowi’s agenda, the government is also demanding higher royalties, land relinquishments and more materials to be procured from local suppliers.
Freeport McMoRan’s current contract was set to expire in 2021 and CEO Richard C. Adkerson has insisted the company will not meet Jakarta’s demands to change its contract, threatening international arbitration.
It was signed in 1991 under the New Order dictatorship, long before Indonesia’s transition to democracy began in 1998.
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