Monday, July 07, 2014

HOT GENERAL MINING ISSUES RE- DIVESTMENT 51% of PT FREEPORT INDONESIA COMPANY DURING 2014 INDONESIAN PRESIDENTIAL /VICE PRESIDENTIAL CANDIDATE DEBATE

During the recent 2014 Indonesian President/Vice President Debate, several hot General Mining Issues concerning Divestment and Renegotiation of Contract Of Works of General Mining emerged  including the Divestment of 51% of PT Freeport Indonesia Company emerged, where it strongly indicates that the Candidates was questioning whether the President / Vice President Candidates are really going to investigate the issues as to why was the Divestment Clause under the Contract of Work of PT Freeport Indonesia which obligates Divestment of the  51% of the total shares issued by PT Freeport Indonesia Company had not been implemented and executed. 
  • As we all know the Contract of Work of PT Freeport Indonesia which was signed by   the Government of Indonesia and PT Freeport Indonesia Company on 30 Desember 1991 (Fifth Generation of COW) which was the renewal of the Contract of Work between Freeport Indonesia Incorporated    and the Government of Indonesia Based on the Decision of the Cabinet Presidium No.82/EK/KEP/4/1967 of 7 April 1967 (First Generation COW).       Based on Article 26 of the Viena Convention - Pacta sunt Servanta it is stipulated that Every Treaty in force is binding upon the parties to it and must be performed by them in good faith. Based on this Article 26 of the Viena Convention of 1969 and pursuant to Article 24 paragraph 2 b Concerning Promotion of National Interest of the Contract of Work of PT Freeport Indonesia dated 30 Desember 1991 it is stipulated that : .
  • ......the Company is required to sell or caused to be sold in public offerings on the Jakarta Stock Exchange, or otherwise to Indonesian Nationals, sufficient shares to equal a total of 51% of the issued shares capital of the Company not later than the twentieth anniversary of the date of the signing of this Agreement (the Contract of Work) to the extent requested by the Government of Indonesia to meet the requirements of then existing laws and regulations and to the extent the financial market conditions in Indonesia at the time permit the shares to be sold in an orederly market at a fair price. 
( Note in the Definition under the COW Article 1 item 4  :Company means PT Freeport Indonesia Company, the corporate successor to FII, any approved Corporate successor:and when used in reference to expenditure nade or other action taken under the Prior Contract or the SIPP also means FII ) 


Based on the above International and Indonesian Legal Grounds, the Indonesia President/Vice President Candidate was raising  the issues that investigation must be conducted why was the 51%  Divestment Obligation which must actually takes place one the 20th Anniversary of the Signing of PT Freeport COW dated 30 December 1991 which means on 30 December 2011 ( which is 20 Years after 30 December 1991)  does not occur. Pursuant to Paragraph 2 of Article 24 of the PT Freeport COW  Indonesian Nationals means an Indonesian Citizen, an Indonesian legal entity controlled by Indonesian Citizens, or the Government of the Republic of Indonesia.
  • During such 2014 Indonesian President/Vice President Candidate Debate, besides The Contract Of Work of PT Freeport, it was also  questioned about Newmont ' s COW.  We understand that  based on Presidential Regulation No.20 Year 1994, the Divestment  of Foreign Investments  in a general business  was  merely 5% for the Local Indonesian  National Investors and Foreign Investars can remain 95%; However this Presidential Regulation  No.20/1994 was more lower level  than  PT Freeport's COW which ranked higher since such COW signed by the Government of the Republic of Indonesia was also been consulted with the DPR (People's House Representative). Thus, the Legal Binding of  the 51% Divestment obligation under Article 24 of  PT Freeport's COW must be binding and must be performed  by the Parties of the PT Freeport COW  pursuant to Article 26 of the Viena Convention.
The above issues were really  hot issues raised  in the 2014 Indonesian President/Vice President Candidate Debate including also the Renegotiating of PT Freeport COW and others COW which was challenged by such 2014 Indonesia President/Vice President  Candidates Debate shown in the Broadcaeted Indonesian Private Television TV One/ Metro TV as well as Berita Satu TV, where pursuant to Article 62 Viena Convention concerning Fundamental change of Circumstances, a Party may request for Renegotiation Long term Contracts Mining if such Fundamental change of circumstances occurs.  In a Desertation  - Renegotiation of Mining Contract in Congo  made by Lukanda Kapwadi  it  shows  that such Article 26 of Viena Conventions as well as the practice of US Law recognizes the regoniatibility of long term contracts for which there exist Yurisprudence of Renegotiation of Long term Mining Contracts in Congo, where Indonesia for sure can learned from such Yurisprudence Renegotiation of Mining Long Term Contracts.
  • Whereas concerning 51% Divestment Obligation under Article 24 paragrap 2 b of the PT Freeport COW is more of binding to the  Parties and  must be performed by PT Freeport Indonesia as well as Freeport McMoran Cooper & Gold and by the Government of Indonesia to be implemented 20 Years after the signing Date of PT Freeport COW dated 30 December 1991 which shall be on the 30 December 2011 pursuant to Article 26 Pacta Sun Servanta of the Viena Convention Year 1969. . 
Jakarta, 6 July 2014
Agung Supomo Suleiman

Friday, April 04, 2014

ARE YOU SEEKING INDONESIAN OIL GAS MINING LAWYER ?

If you are seeking Indonesian Oil Gas and General Mining Lawyers you can contact us in SACO Law Firm, whose founder by the name of  Agung Supomo Suleiman had been experiencing as Business Lawyer  practioner in the Oil Gas and  General Mining Business in Indonesia for more than 30 Years. 

We are eager to assist you  in taping the legal aspects of the oil and gas and general mining business  operations in Indonesia.  If you happen to be venturing business in Indonesia you can easily contact him through his email agungsuleiman@gmail.com or his Hand Phone : 081683067. If you are a Law Firm or Lawyer outside of Indonesia and  are eager to search for a Business Lawyer Correspondence in Indonesia, you may just contact Agung where he will be very happy to assist and develop a mutual  beneficial relationship with you.  
  • Indonesia is an open country for foreign Investors who are interested to seek business ventures and opportunities in Indonesia. The Indonesians are eager to enter into a mutual beneficial business cooperation with Foreign Investors who are interested to develop its business in Indonesia on a mutual understanding of cross culture between different backgrounds. We still need to learn more from the more advance countries how they can develop and grow to become more aware of the business skills and opportunities in several different area of expertise.                 
  In the Oil and Gas Industries as well as the General Mining Ventures in Indonesia, you may need to understand the back ground philosophy of how the most common Indonesian People are expecting to increase their life quality and standards from the revenue originating from the Natural Resources of Oil and Gas as well  the Hard Minerals founded and located in Indonesia. Beside Oil and Gas Exporters, Indonesia is now a Net Importer of Oil for its domestic use and consumption. Thus, the Government purchase the Product of  Oil  from Sellers outside  of Indonesia based on the market price and sell it to Pertamina as the State Owned Company to be sold to the people in Indonesia on a lower price by subsidizing the difference.

  • Relating to the Downstream business prospects,   we understand there are still  significant opportunities for establishing Refinery in Indonesia, however, before funding or putting their monies, Investors wants to firstly have assurances on the feed stock to be proccessed in such Refinery Plant as well as who will purchase the end product of the Crude Oil which are being processed to become  a product.

The Location of the Refinery Plant is also an  important element which had to be considered, which has to be near the Jetty for the Off-Taker to  off-take the Product. Tax Intensive shall  also be a significant element which needs to be  requested by the Investors and granted by the Government of Indonesia to the Refinery Investors.

  • A solid prospective business  plan must be made which  can demonstrates why this investment in the Refinery will work. Licenses for running and operating said Refinery Plant must also be explored to make sure that the legality documents and requirement are full filled and completed. Well, those are some few elements that I as a Business Lawyer wanted to high light to the viewers of this Blog.  
Cheers
Agung S.Suleiman 
Jakarta, 4 April 2014 

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