Indonesia To Take Over Mahakam Block, Papua's Gold Mining Operations

Jakarta (Antara Bali) - The Indonesian government will fully transfer East Kalimantan's Mahakam Block to the state-owned oil and gas enterprise Pertamina and take over Papua's gold mining operations currently managed by Freeport Indonesia.

"President Joko Widodo again affirmed that the government has decided to hand over the Mahakam Block to Pertamina," Ministry of State Secretary Pratikno noted in a press release received by Antara here, Monday.

Currently, the Mahakam Block is still managed by the French oil company, Total E & P Indonesie and Inpex Corp. until 2017.

"As for Freeport, because the new contract runs out in 2021, the Ministry of Energy and Mineral Resources will gradually work to increase Indonesia's ownership," Pratikno revealed.

He pointed out that through this mechanism, Indonesia will be able to maintain the fiscal and increase economic benefits, which were earlier reaped by Freeport.

According to Pratikno, the government has achieved a breakthrough regarding the management of mineral resources through the Law on Mineral and Coal Mining that regulates the relationship between the state and Freeport.

"The management of gold mining by Freeport is initially conducted through a contract of work. It will be transformed into a mining license scheme, so that Indonesia's position as a state will become stronger," Pratikno remarked.

He explained that the unilateral termination of the management of gold and copper mining in Papua province will not solve the problems.

"The unilateral termination will cause new problems. The economy in Papua will be disrupted, and the people will suffer," he affirmed, adding that economic issues will have an impact on the political affairs, damage the investment climate, and weaken Indonesia's position in the Asia Pacific region. (WDY)