Thursday, February 23, 2017

1) Freeport Indonesian Workers Face Layoffs

2) Jokowi warns Freeport
3) Blue Abadi Fund raises US$ 23 million to sustain Indonesia’s Bird’s Head Seascape
4) SOE Holding Ready to Take-in Freeport Shares

1) Freeport Indonesian Workers Face Layoffs
Friday, 24 February 2017 | 05:51 WIB

                    Workers are mining in the underground tunnels of PT Freeport Indonesia. (PT Freeport Indonesia)

JAKARTA, NETRALNEWS.COM - Over 19 thousand workers of PT Freeport Indonesia and its affiliated contractor and privatized companies face the threat of losing their jobs if the US-based copper and gold mining firm halts its production and exports.
It was reported at least 20 expatriate workers have returned to their countries, and over 300 workers have been laid off as a result of the contract crisis between the government and PT Freeport Indonesia, which operates in Mimika District, Papua Province.
Mimika District head Eltinus Omaleng admitted that PT Preeport and a number of affiliated privatized/contractor companies had started to send their workers home, including expatriate workers from various countries.
"In a report of the Mimika Manpower Service, the number of employees who are already laid off has reached over 300 persons. Workers of PT Freeport were sent home. Those who are on leave are ordered not to return to Timika (district capital of Mimika), until the company's operations return to normal.
Every day about 30 to 500 workers are sent home; possibly now they would have reached over one thousand," Omaleng told Antara after receiving thousands of workers who held a rally in front of his office on Feb 17.
The Immigration Office of Tembagapura in Mimika said more than 20 expatriate employees who work with PT Freeport Indonesia's contractor companies had left Timika, Papua, for their countries.
Head of the Immigration Office Jesaja Samuel Enock said in Timika on Feb 19 that some of the expatriate workers were affected by the worker streamlining policy of their companies.
"Some of them have their work contract expired, but some others were affected directly by the crisis which befell PT Freeport. All of them are from the contractor and privatization companies of PT Freeport Indonesia," Enock stated. Expatriate workers who work with PT Freeport were mostly from Australia, New Zealand, the United States, Canada, and the Philippines.
According to the Timika Express online media, there are over 32 thousand workers with PT Freeport Indonesia and other privatization/contractor companies. Some 60 percent of these workers or more than 19 thousand are facing layoffs.
The Manpower and Population Service (MPS) of Papua Province has therefore asked PT Freeport Indonesia to report its plan to lay off thousands of its workers. The Papua MPS Head, Yan Piet Rawar, said on Monday (Feb 20) that in a recent meeting, PT Freeport promised to report its plan to severe work relations with their workers.
"The Papua provincial government has not yet received a report that PT Freeport will lay off some of its workers," Rawar noted.
The Papua manpower chief official said the layoff process should be based on Law No. 13 Year of 2003 on Manpower and the law on the settlement of industrial relations dispute.
"Thus, PT Freeport Indonesia could not lay off its workers all of a sudden, because layoff can only be carried out with a clear reason, whether the company is losing or other reasons. But until now, we are yet to receive an official report from PT Freeport," he remarked.
If PT Freeport has reported its reason to carry out the layoff, the Papua Manpower Service will study the report. The plan to lay off the workers will have impact on the economic conditions of Papua in general and Mimika in particular. Therefore, Rawar hoped that PT Freeport would reconsider its plan carefully.
Papua Regional Police Chief Inspector General Paulus Waterpauw called on the managements of PT Freeport and a number of its contractors not to arbitrarily lay off their workers.
"It is admitted that it is the company's responsibility to take efficient measures, but it may not be arbitrarily in taking a decision (layoff). It should coordinate with the government well. It is feared to create various undesired perceptions if not done unilaterally," Paulus noted Waterpauw in Timika last Friday.
It was earlier reported that PT Freeport Indonesia had stopped its production activities with effect from Feb 10, this year, following the government's objective to have greater control on raw mineral resources. The government has proposed that the Special Mining Operations Permit (IUPK) should be used in place of the existing Contract of Work (CoW).
PT Freeport is reluctant to agree to the Indonesian government's proposal, especially since IUPK holders are obliged to divest up to 51 percent of the shares, which means they will no longer be in full control of the company. Furthermore, Freeport is planning to sue the government in the International Court of Arbitration.
Minister of Energy and Mineral Resources Ignasius Jonan had remarked on Feb 18 that PT Freeport's plan to bring up the dispute in the International Court of Arbitration is legitimate, adding that the arbitration measure is far better as compared to raising issues on dismissal of employees as a tool to apply pressure on the government.
"Global corporations always treat their employees as valuable assets rather than as mere tools to gain profits," Jonan remarked. Meanwhile, Freeport McMoRan Inc, the parent company of PT Freeport Indonesia, stated that the Indonesian government had stopped the CoW, signed in 1991, unilaterally and changed the status into an IUPK.
President and CEO of Freeport McMoRan Inc Richard C. Anderson stated at a press conference in Jakarta on Monday that his party cannot simply foregot the legal rights included in the CoW. Based on the company's records, Freeport had invested US$12 billion and is currently generating $15 billion and has absorbed 32 thousand Indonesian workers.
He further stated that the government had received 60 percent of the direct financial gains from Freeport's operations. Taxes, royalties, and dividends paid to the government since 1991 have reached $16.5 billion, while Freeport McMoRan had received $108 billion in dividends.

2) Jokowi warns Freeport

Anton Hermansyah, Viriya P. Singgih and Farida Susanty

Jakarta | Fri, February 24, 2017 | 06:46 am
As tension between the government and United States-based mining giant Freeport-McMoRan (FCX) continues, President Joko “Jokowi” Widodo has made his first comment on the matter, indicating that he would take firm action if necessary.
Freeport, Indonesia’s oldest foreign investor, has been in a deadlock over its future operations in Indonesia, as the government requires the company’s local subsidiary PT Freeport Indonesia to convert a contract of work (CoW) signed in 1991 into a special mining license (IUPK) in return for an export permit extension.
Freeport Indonesia has repeatedly rejected the idea of contract conversion and stated that if the dispute was prolonged, it may take the case to international arbitration, a move that many deem would be costly for both parties.
“We want to reach a win-win solution, because this is a business matter,” Jokowi said on Thursday. “Now, I will leave this matter to the ministers. However, if [Freeport management] are really difficult to deal with, I will take action.”
On Feb. 17, Freeport Indonesia sent a notification letter to the Energy and Mineral Resources Ministry describing areas of dispute between the two parties.
The issues included the obligation for miners to divest a 51-percent stake within a decade of production, the government’s role in determining base selling prices for minerals, and the contract conversion requirement, all ruled under the new Government Regulation No. 1/2017.
Freeport Indonesia has stated it would be possible to commence international arbitration if no settlement was reached within 120 days of it sending the letter.
Article 21 of Freeport’s CoW states that the government and Freeport Indonesia can settle disputes by arbitration in accordance with the 1976 Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) if they cannot reach an amicable settlement within 120 days.
“One of the advantages of using arbitration over litigation is that the process is quicker, as a binding ruling can be determined within around three to six months. Nonetheless, the greater the complexity of the case, the longer it takes to conclude,” Hanafiah Ponggawa and Partners managing partner Constant Marino Ponggawa said.
He explained that the appointment of a presiding arbitrator could take months, as the arbitrators of both the petitioner and the defendant were often involved in a debate over the ideal person to act as presiding arbitrator. According to Marino, fees for an arbitrator could reach millions of US dollars, depending on the reputation of the appointed person.
He said the arbitral tribunal would typically choose a neutral country to host the hearings.
“Then, whatever the decision made by the end of the arbitration process, it has to be followed by the losing side,” Marino said. “Moreover, UNCITRAL is the legal body of the United Nations system. Hence, it can make international lobbies to ensure the compliance of its ruling.”
Earlier this week, Freeport chief executive Richard Adkerson said the company expected to find a win-win solution during the dispute settlement period as the Grasberg mine was too important for either party to neglect.
“It’s an important asset for the company. It’s an important, vital, natural resource for the Republic of Indonesia. […] But we have to find a way to work together, and Freeport is committed to trying to do that,” he said.
Under the CoW, Freeport Indonesia was initially required to sell 51 percent of its stake to Indonesian entities by 2011, or 45 percent if it had sold a minimum of 20 percent in the local stock market. Freeport owns 90.64 percent of Freeport Indonesia, while 9.36 percent is owned by the Indonesian government.
In response to the case, Finance Minister Sri Mulyani Indrawati said the government was undertaking “transitional negotiations” to tweak the management of the mining industry for the sake of investment and national interests, such as job creation, exports and state revenues.
“There will not be private, murky negotiations any longer. We just want to abide by the law and try to be better in explaining this situation to the investors.”
Since commencing operations more than five decades ago, Freeport is synonymous domestically with gold, not copper, and is usually perceived with suspicions. All affairs related to the company have always been political, with many Indonesian politicians and activists referring to it as a symbol of US economic imperialism in Indonesia.


3) Blue Abadi Fund raises US$ 23 million to sustain Indonesia’s Bird’s Head Seascape

India Blooms News Service

Bali, Indonesia: Feb 24 (Just Earth News)– At the World Ocean Summit Friday, Conservation International, The Nature Conservancy, World Wildlife Fund and the Indonesian government announced US$23 million in support for the Blue Abadi Fund, which is on track to be the world’s largest marine conservation trust.

The Fund is uniquely designed to support local community stewardship of the protected areas of the world’s most biodiverse reefs, Indonesia’s Bird’s Head Seascape.
The announcement comes just five months after the Fund initiative was announced.  Once the Fund is fully capitalized, the Seascape will contain Indonesia’s first sustainably financed marine protected area network (MPAs).
Located in West Papua, the Bird's Head Seascape encompasses more than 2,500 islands and reefs and supports thousands of species -- including 70 that can be found nowhere else on Earth.
The Blue Abadi Fund will help secure the long-term financial sustainability of the Bird’s Head Seascape by providing grants to local communities and agencies so they can sustainably manage their marine resources into the future. 
The Fund is a powerful example of how local leadership combined with coordinated global support can deliver sustained conservation goals.  Founding supporters include: the  Walton Family Foundation, USAID, MacArthur Foundation, Global Environment Facility and others.

“These protected areas exist thanks to the support and involvement of local communities and fishermen,” said Rob Walton of the Walton Family Foundation, which has been working in the Bird’s Head region for more than a decade.
“Of course it is not enough to create marine protected areas, you have to have long-term management and enforcement. That is what the Blue Abadi fund is all about.”
The Bird’s Head Seascape coalition was launched in 2004 by Conservation International, The Nature Conservancy and World Wildlife Fund and now includes 30 conservation partners, including local and national governments, international and local NGOs, and academic institutions. Its mission is to ensure sustainable management of the Bird’s Head Seascape’s resources in a way that empowers local indigenous communities while enhancing their food security and livelihoods.
“The future of our planet depends upon the wisdom of communities,” said Peter Seligmann, chairman and CEO of Conservation International. “Through the Blue Abadi Fund the global community joins with local communities to secure the long-term health of the Bird's Head seascape, arguably the most diverse marine region of Planet Earth.”
Since the launch of the Coalition 12 years ago, the MPA Network in the Bird’s Head Seascape has grown include 3.6 million hectares of MPAs or approximately 20% of all MPAs in Indonesia.  Locally managed by communities and government, the MPA Network prioritizes biodiversity conservation and sustainable local fisheries. Working together, they have reduced overfishing by outside poachers by 90 percent while enjoying growth in sustainable fisheries, food security and tourism.

Overall, the Coalition effort has engaged 30 partner organizations — including Conservation International, The Nature Conservancy, the World Wildlife Fund — and 70 donors, both local and global. The governments of Indonesia and the West Papua Province, along with local communities, have played fundamental roles in managing the MPA network and local fisheries.

The Bird’s Head Seascape Coalition will complete a full transfer of MPA management responsibilities to local communities and the government by June 2017, who will then co-manage them into the future. Local funding sources will provide 70 percent of the financing needed for the seascape, with the Indonesian government being the largest source of funding, and the Blue Abadi Fund providing the remaining 30 percent.
In a demonstration of their commitment to the MPA network and as a match to the Blue Abadi Fund, the West Papuan government has committed to provide a minimum of Rp. (US$555,000) per year to the management of the MPA network starting in 2018. Budget allocations from the National government as well as revenues generated from tourism user fees will also contribute to the MPA costs.
“As a conservation province, our natural resources are of strategic value and importance for West Papua. To ensure that we continue to benefit from conservation, we need to work together to ensure that our MPAs are sufficiently and sustainably funded,” said Drs. Nathaniel D. Mandacan, M.Si, the Secretary General of the West Papua Provincial Government.
Local communities and agencies will use the funds to implement comprehensive management plans for the 12 MPAs that support activities such as effective patrol systems, community outreach and development, and ecological and social monitoring so management activities can be adapted over time. Funds will also be available to Papuan civil society for innovative community conservation and fishing projects, and more.

FRIDAY, 24 FEBRUARY, 2017 | 10:30 WIB
4) SOE Holding Ready to Take-in Freeport Shares
TEMPO.COJakarta - The State-owned Enterprises (SOE) Ministry prepares to purchase some of Freeport Indonesia's divested shares. The shares will be taken by the holding company of mining SOEs.
The ministry's special staff and chief of the Freeport Divestment Team, Budi Gunadi Sadikin, said on Thursday that the the US miner will likely divest 10.64 percent of their shares.
Budi said the government's 9.36-percent stake in Freeport will also be allocated to the Mining SOEs Holding, which is led by Indonesia Asahan Aluminium (Inalum).
The members of the holding are Aneka Tambang or Antam, PT Timah, and Bukit Asam. The companies will be merged in the process.
Government Regulation No. 1/2017 requires Freeport Indonesia (IDX: FTPI) to divest 51 percent of its stake to the state. Energy and Mineral Resources Ignasius Jonan said the shares must first be offered to the central government.
Freeport has so far refused the obligatory divestment, saying that 51 percent is too much and said that their contract (KK) only mandates 30 percent.
There is no agreement share price either. Freeport wants to sell 10.64 percent stake for US$1.7 billion while the Energy Ministry claims that their calculations show a price of just US$630 million.
The ministry's director general for coal and mineral Gatot Ariyono said Freeport's offered price is too high as it includes copper reserves until 2041. Price offers, he said, should only take replacement costs into calculations.
The US-based miner has not agreed to change its contract to a special mining license (IUPK) either.
"We have already developed underground mines," Freeport spokesman Riza Pratama said last week.

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