Environment holds up Freeport deal
3:42 PM
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The government’s plan to finalize the takeover of gold and copper mining company PT Freeport Indonesia (PTFI) is facing a crucial issue, as the lenders set to provide loans for the acquisition require the settlement of environmental issues.
State-owned energy holding PT Indonesia Asahan Aluminium (PT Inalum) president director Budi Gunadi Sadikin said at a hearing with the House of Representatives that the potential lenders were only comfortable with disbursing loans if there was clearance from the government on environmental aspects.
"Hence, We are pushing PTFI to resolve the environmental issue, otherwise it is hard to get funding from international institutions, [___] There are conditions; banks require assurance on environmental clearance,” Budi told members of the House’s Commission VII, which oversees mining, on Wednesday Addressing the environmental issue, PTFI President Director Tony Wenas told the press after the hearing that the company was confident about completing unfinished work, considering there were only six of 30 issues yet to resolve.
PTFI President Director Tony Wenas
“So far, We have carried out 24 orders, only six are left now, [resolving them] still needs time. Two are documents on an environmental assessment to be issued bythe ministry and the issuance ot a new permit on the utilization of forest area," he said.
Indicating that the ball is now in the governments court. llyas Asaad, the team leader from the Emironment and Forestry Ministry overseeing PTFl’s environmental aspects, could not be reached for comment on Wednesday.
Tailing of Freeport-McMoRan (FCX)
Inalum is the governments representative in the purchase of a controlling stake in PTFI through long negotiations with United States-based mining giant Freeport-McMoRan (FCX). The state is set to own 51 percent of PTFI, the local subsidiary of FCX. On Sept. 28, lnalum settled some agreements with FCX on divestment and shareholder agreement.
Inalum has also signed a sales and purchase agreement with PT Rio Tinto Indonesia, the local arm of Anglo-Australian miner Rio Tinto, which has a 40 percent participating interest in PTFI, lnalum hopes to wrap up the whole divestment process by the end of the year, including the payment of US$ 33.85 billion, to own 51 percent and the issuance of PTFI’s special mining permit (IUPK) that contains clearance from the Environment and Forestry Ministry (KLHK).
Claims of environment damage from PTFI’s operations were voiced again by lawmakers on Wednesday as they strongly criticized the government over the issue. House Commission VII chairman Gus Irawan Pasaribu said at the hearing lawmakers referred to an audit report published by the Supreme Audit Agency (BPK) in 2017.
“There is a report from the BPK that the environmental damage of PTFI’s operations amount to Rp 185 trillion [$12.1 billion] That finding should become a key issue in this divestment process,” he said.
“There is a report from the BPK that the environmental damage of PTFI’s operations amount to Rp 185 trillion [$12.1 billion] That finding should become a key issue in this divestment process,” he said.
Gus was referring to the results of two separate audits on tailing impact by the Bogor Agricultural University (IPB) from 1988-1990 and the National Institute of Aeronautics and Space (Lapan) from 2015-2016. The audits became one of the reasons for the BPK to audit the implementation of PTFI’s contract of work (COW) during the fiscal years of 2013 to 2015.
Previously, Aiesh Rumbekwan, the executive director of the Papuan chapter ofthe Indonesian Forum for the Environment (Walhi), urged the government not to overlook the environment impact of PTFI’s operations in this deal. He added he had not seen environmental improvement so far.
Jakarta Post, Page-13, Thursday, Oct 18, 2018
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