State Sovereignty in Freeport Contract of Work Renegotiation

Khamami Zada

, M. Mustolih

, Muhammad Maksum

, and Atep Abdurofiq

Universitas Islam Negeri Syarif Hidayatullah Jakarta

Keywords: State Sovereignty, Contract of Work, Renegotiation, Freeport

Abstract: Natural resources management in Indonesia has always been related to the politics and the issue of

sovereignty. Unfortunately, the legal politics related to Freeport Contract of Work has put Indonesia in an

unprofitable position since New Order era. New Order regime’s legal and political frameworks are devoid

of the concept of state sovereignty in terms of natural resources management. Mineral resources

management was handed over to the private company with equal position to the government, resulting in a

huge private financial gain. The implementation of Law Number 4 of 2009 on mineral and coal mining did

not automatically enforce state sovereignty in natural resources management. This study examines the

policy of Indonesian government under President Joko Widodo using legal politics approach in

renegotiating the contract of work for Freeport. The policy succeeded in finishing the contract of work

negotiation with 51 percent share divestment from Freeport to Indonesia. However, this policy is still unable

to return the rights and enforce state sovereignty in natural resources management since Freeport still has

the control over the management. This negotiation was done in order to minimize social and political

turmoil in Papua if the government failed to prolong the Freeport contract of work, resulting in Freeport

ceasing their operation.

1 INTRODUCTION

Natural resource management in Indonesia is still

regarded as a serious matter due to the powerful

political and economic interests of the ruling regime

so that national interests are neglected to pursue

foreign investment which is detrimental to state

sovereignty. Mining management at Freeport in

Mimika, Papua (Indonesia) was seen as a state

policy that did not prioritize national interests and

abandoned state sovereignty.

A number of studies have shown that Freeport

mining in Papua contradicts the constitution due to

foreign intervention that erodes state sovereignty. In

fact, Denise Leith called the Freeport mining as a

political power of the New Order regime, supported

by military power to force political control over

Papua. Furthermore, Chris Ballard discovered

violations of indigenous peoples' rights by PT

Freeport Indonesia in Papua using military force,

which resulted in the people having to relocate and

lose their livelihoods that could be categorized as

international violations. On the contrary, Rifai-

Hasan actually sees Freeport mining in Papua as

contributing to sustainable development and poverty

reduction instead in which Freeport mining

operations contribute to a multiplier effect in moving

the economy in Papua.

This study will analyze Freeport's Contract of

Work renegotiation in the period of 2016-2018,

focusing on the aspects of state sovereignty related

to natural resource policies. This study was done

using political legal analysis that links the direction

of state policy in renegotiating Freeport's Contract of

Work under Joko Widodo’s administration.

This study will analyze Freeport's Contract of

Work renegotiation using sovereignty theory which

is then linked to legal politics. Thus, the sovereignty

theory does not stand alone in explaining the

phenomenon of the Freeport’s Contract of Work

renegotiation since it will be viewed within the

framework of law and political interests. State

sovereignty theory always deals with two

characteristics: (1) internal supremacy, which is the

supremacy inherent to the territory and (2) external

independence, which is the independence over

international relations with other countries. Charles

G. Fenwick called it an undivided authority for

everyone and was independent from the control of

other countries.

994

Zada, K., Mustolih, M., Maksum, M. and Abduroﬁq, A.

State Sovereignty in Freeport Contract of Work Renegotiation.

DOI: 10.5220/0009921909941001

In Proceedings of the 1st International Conference on Recent Innovations (ICRI 2018), pages 994-1001

ISBN: 978-989-758-458-9

Therefore, based on its sovereignty, the state

exercised its authority to manage its territories and

to deal in relationship with other countries. The state

authority in carrying out its sovereignty still refers to

laws/regulations and public interests. Thus, the state

sovereignty in exercising its authority is subject to

state compliance on laws/regulations, both national

and international law and the public interest of a

nation. The interaction between compliance on law

and the realization of public interests will test the

way state sovereignty carried out its policies. This is

the theory that will explain the Freeport’s Contract

of Work renegotiation in two dilemmatic positions,

namely submitting to the contract as an international

agreement or pursuing the aspirations toward public

interest of the Indonesian people in managing their

natural resources.

2 HISTORICAL BACKGROUND

Since the colonial era, natural resources

management in Indonesia actually has a close

relationship with law and politics, which is then

called as "mining management legal politics" that is

closely related to foreign investment. In the history

of Nusantara archipelago, foreign traders are

flooding in from China, Arabic, Portuguese, and

Dutch, carrying out international trade in traditional

means. Only in the period of colonialism did the

Dutch forego trade politics by modernizing

commercial law through Wetboek van Koophandel

(Commercial Code), introducing business entities

and unions as a basis for Dutch legal politics to fully

control the developing capital in the archipelago.

Unfortunately, these investments ceased during the

Japanese occupation. In fact, Japan prohibited the

export of raw materials on a large scale so that there

were no investment activities.

After independence, the Indonesian government

needed foreign capital for national development. It

gave way to the Law No.78 of 1958 on Foreign

Investments, which was later amended by the

Government Regulation in Lieu of Laws of the

Republic of Indonesia No.15 of 1960 concerning

Amendments to Law No.78 of 1958 on Foreign

Investments. Afterwards, the Law No.37/Prp of

1960 was issued concerning Mining which affirmed

that the state was an authority that needs to be

involved in mining business activities as a form of

national wealth controlled by the state. Legal politics

at this time implements the principle of state

sovereignty over natural resources where the state

becomes the entity that carries out mining business.

After Sukarno was succeeded by Soeharto, the

New Order government enacted Law No.1 of 1967

on Foreign Investments. The New Order's legal

policy then changed from the previous direction by

allowing total foreign investments (Article 6 (1)) as

well as putting the state's position in line with

foreign private entities in the form of a Contract of

Work (Article 8 (1)). Furthermore, a policy in the

form of joint venture scheme was issued as

stipulated in the Government Regulation No.17 of

1992 and the Presidential Decree No.32, 33, and 34

of 1992. This is the fundamental weakness of the

Law of 1967 on Foreign Investments since it

actually contained a number of problems, namely

the imbalance in profit sharing, imbalance in

bargaining position, the issue of manipulation, abuse

of office and corruption in contract making,

power/regime changes, environmental damage, and

community objections.

In April 1967, exactly 3 months after the

enactment of the Law of 1967 on Foreign

Investments, Freeport McMoran, a foreign company

established and subject to the State of Delaware,

United States, entered into a Contract of Work with

the Government of Indonesia, represented by the

Minister of Mines and Energy. Armed with this

Contract of Work, Freeport became the exclusive

contractor of the Ertsberg mine in Papua, covering

over an area of 10 square kilometers, which was

later expanded in 1989 to 61 thousand hectares for

the period 1967-1991. Contract of work between

Indonesian government and Freeport was established

in the Decree of the Cabinet Presidium Number

82/EK/KEP/4/1967 on April 7, 1967. From the

perspective of international business, this Freeport

Contract of Work with the Indonesian government is

a form of international business contract. Ironically,

a few months after the Contract of Work was signed,

specifically on December 1967, Law Number 11 of

1967 concerning the Basic Provisions of Mining was

ratified. Moreover, in 1970, Law Number 11 of 1970

concerning Amendments and Supplements to Law

Number 1 of 1967 on Foreign Investments was

issued that regulates the leeway for taxation from

foreign investments.

In December 1991, PT Freeport Indonesia

(PTFI) signed acontract of work extension with a

validity period of 30 years with an option to extend

twice for ten years. Thus, Freeport Contract of Work

will end in 2021. In the extended contract of work,

Indonesian government has succeeded in obtaining a

stock share of PTFI with the inclusion of an article

asserting that PTFI has an obligation to divest its

shares in two stages until the national ownership of

State Sovereignty in Freeport Contract of Work Renegotiation

995

its share reaches 51 percent. The illustration is that,

Freeport was obliged to release 9.36 percent of its

shares in the first phase to the Indonesian

government in the first 10 years since 1991. The

second phase then began in 2001 where Freeport had

to release 2 percent of its shares every year until

national ownership reached 51 percent.

Unfortunately, this continued divestment was not

carried out by PTFI because the New Order

Government issued Government Regulation Number

20 of 1994 concerning Share Ownership in

Companies Set Up in the Framework of Foreign

Investment (Article 2 (1) b), stating that foreign

investment can be done directly, meaning that all of

its capital is owned by foreign citizens and/or legal

entities. This implies that foreign shares ownership

in Indonesia can be owned up to 100 percent. This

makes Freeport McMoran bought back Indocooper

shares that has been released previously.

The direction of Indonesia’s legal politics seems

to be devoid of the principle of state sovereignty

over natural resources. Mining management was left

to foreign private companies with a position equal to

the Government, resulting in huge private financial

gains. It is not surprising that the Law of 1967 on

Foreign Investments invited public criticism because

it contained a number of problems, namely an

imbalance in profits sharing, imbalance of

bargaining position, the issue of manipulation, abuse

of office and corruption in contract making,

power/regime changes, environmental damage, and

community objections. In other words, legal policy

corruption is evident in the Freeport Contract of

Work under the Law of 1967 on Foreign

Investments.

In fact, the national leadership since the

reformation era failed to take care of PT Freeport

Indonesia regarding the issue of state sovereignty

over natural resource management. Even though,

based on the Constitutional Court Decision Number

002/PUU-I/2003, the form of natural resource

management through licensing is in accordance with

Article 33 of the 1945 Constitution and is not a civil

contract. This is reinforced by the Constitutional

Court Decision Number 36/PUU- X/2012

concerning the judicial review of Law Number 22 of

2001 on Oil and Gas, stating that the contract regime

contained in the Cooperation Contract in which the

Oil and Gas Regulatory Agency represents the

Indonesian government, placed the government in

civil relations position which is equal with the

company so that the state loses discretion to make

regulations for the benefit of the people, who in turn

lose their sovereignty in managing natural resources.

According to the Constitutional Court, the

relationship between the state and private institution

is not a civil relationship, but a public relationship in

the form of giving permission. On this basis,

Freeport Contract of Work actually contradicts

Article 33 of the 1945 Constitution of the Republic

of Indonesia because it is a civil contract that is not

in accordance with the right of state to control

resources. The state is bound to the Contract of

Work which means that it has degraded state

sovereignty to manage natural resources. >>>Your

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3 FREEPORT CONTRACT OF

WORK AFTER THE

ENACTMENT OF LAW OF 2009

ON MINERAL AND COAL

MINING

After the enactment of Law Number 4 of 2009 on

Mineral and Coal Mining, the Contract of Work

system is no longer used by mining companies and

was replaced with a mining business permit system.

This means that the regime used is the licensing

regime rather than the contract regime. This legal

policy brings important changes, such as: (1) from

the aspect of legal relations, it is a public

relationship since it uses the instrument of state

administrative law, not civil law; (2) from the aspect

of law enforcement, it is carried out by the

government, not both parties; (3) the choice of law

does not apply; (4) the dispute is submitted to the

Administrative Court and not to the international

arbitration; (5) the rights and obligations of the

Indonesian government are greater; (6) the source

comes from legislation, not contracts, and; (7) the

consequences are unilateral, not the agreement of

both parties.

The Law of 2009 on Mineral and Coal Mining

gives a clear direction for the position of contract of

work. Article 169 states: (a) that the existing

Contract of Work prior to the enactment of this Law

is still in force until the expiration of the

contract/agreement, and; (b) the provisions

ICRI 2018 - International Conference Recent Innovation

996

contained in the article of the Contract of Work are

adjusted no later than 1 year after this Law is

promulgated. The provisions of Article 169 above

are in accordance with Article 1338 of The Civil

Code which states that the agreement must not have

a conflict with law, decency and propriety. In the

opposite sense, if it is contradictory, then the

agreement becomes null and void.

However, by using the principle of pacta sunt

servanda, Indonesian government is subject to "the

principle of binding agreement", in which the

Indonesian government cannot unilaterally impose

to amend the Freeport Contract of Work with a

Special Mining Business License, included in some

strategic issues within this Law are:

1. The area is limited to a maximum of 100,000

hectares and a maximum of 25,000 hectares for

area of operation (Article 83).

2. Contract extension is 20 years maximum and

can be extended for 10 years each. The holder

of the production operation permits that has

been granted an extension for 2 times must

return the area of operations to the Indonesian

government (Article 83).

3. State revenues in the form of royalty amounted

to 4 percent for copper, 3.75 percent for gold,

and 3.25 percent for silver from the selling

price.

4. The obligation for divestment takes effect after

the company has been in production for 5 years

to the central government, regional government,

State-Owned Enterprises (BUMN), Regional-

Owned Enterprises (BUMD), or national private

enterprises (Article 79 and 112).

5. Obligation of processing and refining

domestically by building smelters to increase

the added value of mineral resources in the

implementation of mining, processing, refining,

and mineral utilizations (Article 79, 102, 103,

104, and 124).

6. Obligation to use domestic goods and services

(Article 141).

With the enactment of the Law of 2009 on

Mineral and Coal Mining, Freeport Contract of

Work must be adjusted. In other words, in 2010, as

mandated by the Law, Freeport Contract of Work

should have been adjusted to avoid conflicts with the

Law of 2009 on Mineral and Coal Mining

4 THE ROAD TO

RENEGOTIATION

Adjustment of the Contract of Work is the mandate

of Law Number 4 of 2009 on Mineral and Coal

Mining. Freeport, which holds the 1991 Contract of

Work, was affected by the enactment of this Law.

Unfortunately however, Freeport still refuses to

make adjustments and asks the Indonesian

government to be consistent with the previously

agreed contract of work. As Stated in Article 21 (1)

of the Contract of Work, if there was a dispute, it

can be pursued by means of peace or arbitration. The

peace path will take place in accordance with The

United Nations Commission on International Trade

Law (UNCITRAL) peace regulations, while the

arbitration route will be carried out according to

UNCITRAL arbitration regulations.

This could become a deadlock if there was no

agreement between the two parties. To make it even

worse, the 1991 Contract of Work did not regulate

the provisions regarding contract changes, which

makes it difficult for the government to impose

adjustment over Freeport based on the Law of 2009

on Mineral and Coal Mining.

If Freeport refused to make adjustments, then

one of the parties to the 1991 Contract of Work can

bring the dispute toward arbitration as the chosen

clause provisoire and agreed upon by the parties in

Article 21 of the Contract of Work concerning

dispute resolution. Unfortunately, the clause

provisiore in the 1991 Contract of Work does not

specify an ad hoc arbitration or institutional

arbitration and also which arbitration body agreed

that will resolve the dispute so as to allow a new

agreement outside the contract, which is called a

clause compromisoire. However, Article 154 of the

Law of 2009 on Mineral and Coal.

Mining states that "any dispute that arises in the

implementation of a Mining Business License, or a

Special Mining Business License is settled through a

court and domestic arbitration in accordance with

the provisions of the legislation". This could be the

basis that the arbitration used in resolving the

dispute over 1991 Contract of Work is a national

arbitration body.

The choice of law used was also not regulated

in the 1991 Contract of Work so that a clause

compromisoire outside the contract to choose

Indonesian law was needed. In principle, the choice

of law is the freedom given to the parties to choose

which law to be used to resolve their contract

disputes. If not stated in the contract, then the

theories of the International Civil Law can be used.

State Sovereignty in Freeport Contract of Work Renegotiation

997

The lex loci contractus theory states that the law that

applies to an international contract is the law in

which the agreement or contract was made. As a

development of this theory, the lex loci solutionis

theory emerged, which states that the law that

applies to a contract is the place where the contract

is carried out. On the other hand, The Proper Law of

The Contract theory states that the proper law of a

contract is a legal system that is desired by the

parties, or if the will is not stated or not known from

the circumstances, the proper law for the contract is

a legal system that has the closest and most tangible

connection to the transactions that occured. There is

also the theory of The Most Characteristic

Connection which asserts that if the parties to an

international contract did not determine their choice

of law, then the law of the country in which the

contract is concerned will show the most

characteristic connection, which is a large, strong

and has specific achievement will be applied.

If the lex loci contractus and lex loci solutionis

theories were used, Indonesian law will be used to

resolve the disputes. However, if The Proper Law of

The Contract theory was used, then both parties

must agree to make a choice of law or use a legal

system that has the closest and most tangible

relations with the transactions that occured. If The

Most Characteristic Connection theory was used, it

is necessary to decide which country related to the

contract in question has a large, strong, and specific

achievement.

5 LEGAL CONSIDERATIONS IN

THE DISPUTES OF 1991

CONTRACT OF WORK

There were a number of legal considerations in

explaining the disputes over Freeport Contract of

Work after the enactment of Law of 2009 on

Mineral and Coal Mining. First, based on the

principle of pacta sunt servanda, Freeport could not

be forced to change the Contract of Work into a

Special Mining Business License for reasons such as

the enactment of the Law of 2009 on Mineral and

Coal Mining. However, the question remains

regarding whether or not the principle of pacta sunt

servanda is absolute that the Indonesian government

is forced to subject itself to the Contract of Work.

The answer is no, since this principle can be limited

by exceptions given by law. The limitation of this

principle is reinforced by the doctrine of rebus sic

stantibus, which states that the obligation in an

agreement will end (or be adjusted) if conditions

change, especially if it was a large-scale contract and

covering a long time.

Second, pacta sunt servanda is also not absolute

as seen in Article 1338 (2) and 1339 of the Civil

Code which states that the contract can be

withdrawn if there are sufficient reasons according

to the law and the agreement must be based on

propriety, customs, and/or law. Thus, if the

adjustment to 1991 Contract of Work has sufficient

grounds based on the law (ie not contrary to the law

as stated in Article 1339 of the Civil Code), then the

adjustment to the Contract of Work does not violate

the principle of pacta sunt servanda, so PT Freeport

Indonesia cannot relied on the Contract of Work

because it has been contradicted the Law of 2009 on

Mineral and

Coal Mining. This is the reason the Law of

2009 on Mineral and Coal Mining is a valid legal

basis for doing adjustments to the 1991 Contract of

Work. Similarly, other laws and regulations also

support this, such as the Government Regulation

No.9 of 2012 regarding the Classification and

Tariffs upon Non-Tax Revenue.

6 NATIONAL INTEREST IN THE

CONTRACT OF WORK

The Contract of Work between the government of

the Republic of Indonesia and PTFI always

experiences dynamics, so much so that it becomes

the subject of discussion and discourses both at the

domestic and international levels. In July 2018, the

Indonesian government has officially signed a Head

of Agreement (HoA) with Freeport as the road to

share divestment. Later on, The Indonesian

government encourages PT Inalum as a red plate

mining holdings to divest Freeport shares. Head of

Agreement is a basic agreement related to

cooperation and transactions. Head of Agreement is

equivalent to the term Heads of Terms or Letter of

Intent. The Head of Agreement is the first step from

the many steps taken in the next agreements that will

legally bind the relevant parties in order to control

the majority of share ownership up to 51 percent,

which later will legally bind the parties through the

purchase of Rio Tinto shares with the worth of USD

3.85 billion. The capital will be used to purchase Rio

Tinto’s Participating Interest and 100 percent of

FCX shares at PT Indocopper Investama. Rio Tinto's

Participating Interest at PTFI was 40 percent, while

Indocopper's shares were 9.36 percent.

ICRI 2018 - International Conference Recent Innovation

998

The Indonesian government has a very strong

desire to be the controlling party of the Freeport

mining company which is among the largest mineral

producers in the world, specifically for copper and

gold. By having a majority share of up to 51 percent,

Indonesia will have the flexibility and authority to

manage natural resources. In other words, Indonesia

will achieve sovereignty in mining management that

has an economic value of millions of billions of

dollars so that all profits obtained could be used to

the maximum extent for the prosperity of its people

as mandated by Article 33 of the 1945 Constitution.

Currently, Indonesian government only has 9.36

percent shares.

The HoA itself is actually a follow-up to the

tough negotiations carried out recently for almost 4

years. There are six main issues that continue to be

discussed at the negotiating table, which is the

narrowing of the mining area that Freeport is

working on, including exploration blocks, state

revenues (taxes and royalties), share divestments,

use of domestic goods and services, contract

extension, and construction of smelters (refineries).

Within the business framework, each party is

very eager in getting the maximum economic value

considering that for almost 50 years, the mining

products produced by Freeport produce billions of

dollars. This will be crucial when the term of the

Contract of Work expires in 2021, which is only a

few years away. Freeport wants certainty in

investing, while the Indonesian government has a

target of getting added value that can provide

significant income to the state revenues.

7 CHALLENGES AND

OPPORTUNITIES

September 27, 2018 can be considered a historic

day for the Indonesian people because it is a mark

where the mining company Freeport Indonesia

limited (PT FI) has officially became a part of the

resource of the Indonesian government by way of

acquisition, even though it has not been one hundred

percent acquired. Through PT Indonesia Asahan

Alumunium (Inalum) as the holding company for

State-owned mining company, Freeport McMoran

(FM) has released most of the shares in PTFI where

Inalum bought Rio Tinto's participating interest,

namely the rights and obligations attached to Rio

Tinto related to the operation of Freeport Indonesia,

even though Rio Tinto is not a shareholder of PTFI.

Thus, the share ownership of the government of the

Republic of Indonesia (through Inalum) in PTFI

reaches 51 percent or in other words, Inalum became

the controlling shareholder through various

agreement schemes including the sale and purchase

agreement. This is a follow-up step after the related

parties agreed on a Head of Agreement (HoA). The

dream of the Indonesian people from time to time to

take over PTFI could actually be realized.

After this event, the Contract of Work regime

was terminated as mandated by the Law no.9 of

2009 on Mineral and Coal Mining, which gives the

mandate to all mining businesses to use the scheme

of license permits, placing the government in a

higher position as the licensing authority. This is

different from the Contract of Work regime which

places the government in an equal position with the

corporations or companies, making the

government’s position as subject to ordinary civil

law. The government will issue permits through a 2x

10year permit scheme until 2021 where the Contract

of Work will end.

The choice of the Indonesian government to buy

shares of Rio Tinto's participation interests in PTFI

can be understood naturally as a form of long-term

strategic plan, compared to having to wait for the

contract of work to expire in 2021. It is true that the

contract of work can be handed over to the

government, however if the Indonesian government

did not extend the Contract of Work, the assets given

by PTFI would not be considered as free to give. If

the government wanted to take over the assets, the

price is also considered as not cheap. Thus, the

acquisition path was chosen because it was

considered more efficient and profitable than having

to wait for 2021 from the aspect of economic

calculation.

However, despite having entered into various

agreements with FM and Rio Tinto, the new

agreement will be truly effective if Inalum made the

payment to show the commitment and to follow-up

the agreement that must be done no later than at the

end of 2018. To realize its steps, Inalum needs a

large amount of funding and certainly requires large

and strong investors. The steps would not be realized

if Inalum only relied on the financial strength of

state-owned banks. Therefore, Inalum must seek

strategic investors, especially foreign investors,

while also remains protected and provides a greater

portion to the national interests. This is because

foreign investors might be concerned with the

strategic interests of their countries more, especially

if the companies that will provide loans are a foreign

state-owned company that will certainly brings the

interests of its country.

With the divestment of FM shares and ownership

of Inalum shares as controllers, the government can

restructure the management at any time. PTFI will

later become a subsidiary of Inalum so that PTFI

State Sovereignty in Freeport Contract of Work Renegotiation

999

will be equal to other state-owned companies such

as PT Timah, PT Aneka Tambang (Antam), PT

Bukti Asam, and the likes. Therefore, PTFI will be

treated as a state-owned corporation. Likewise, the

laws that will apply will also be bound by the laws

and regulations in Indonesia, including regional

regulations, state financial regulations, taxation,

environmental regulations, and regulations on state-

owned enterprises while PTFI can later be audited

by the Audit Board of the Republic of Indonesia

(Badan Pemeriksa Keuangan). PTFI's management

must be very careful because if there is an error

resulting from negligence, it can be subject to

criminal acts related to corruption.

However, aside from the discussion related to

PTFI's shares divestment by Inalum, there is another

agenda that is equally important and urgent to be

resolved, which is related to the environmental

issues. From the records of the Ministry of

Environment, there are at least 48 violations

committed by PTFI against various existing

regulations and policies. One of the most highlighted

was the practice of PTFI waste disposal into rivers

and ocean, which is very damaging to the existing

ecosystem. There must be concrete and real changes

so the damage would not be more broadly spread.

There are also human rights issues caused by the

exploration of PTFI. The violations of the rights of

indigenous peoples in Papua are still becoming a

serious problem, such as being expelled from their

native lands and the negligence of customary rights.

8 CONCLUSIONS

For almost five decades of its journey, the Contract

of Work has always experienced ups and downs

because it involves great interests between the state

on one side and multinational companies on the

other side. The spirit of self-reliance and sovereignty

over natural resources management owned by the

Indonesian people have indeed strengthened in the

last few decades, especially since the reformation

era to reduce dependence on other parties. Freeport

is considered as a benchmark to be controlled in

securing national interests. By holding a majority of

shares amounted to 51 percent, Indonesia will have

sovereignty in mining management as mandated by

Article 33 of the 1945 Constitution.

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