19 May 2006

Indonesia may seek to renegotiate Freeport operations in Papua

6:11 am on 19 May 2006

Indonesia's government may soon seek to renegotiate its existing contract with Freeport over its Grasberg mine in Papua province.

The Jakarta Post reports that the government may call for a contract renegotiation "in the next two months" following the completion of an official review of the company's operations and its contribution to local communities.

However Freeport officials have pointed out that the existing contract between the firm and the Indonesian government bars unilateral moves to renegotiate the terms of the company's Grasberg operations.

Muhammad Lufti, chairman of Indonesia's official Investment Coordinating Board, said in March that the government is committed to honouring the contracts and protecting the assets of all foreign investors, including mining companies in remote regions.

Freeport's Papua operations have been under intense scrutiny in recent months over its payments to military forces in the province and allegations of environmental pollution.