Freeport Indonesia on the Brink Of Losing Copper Export Permit
Jakarta. Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, is on the brink of losing its permit to export copper concentrate from its Indonesian mine in West Papua, Indonesia’s energy and mining minister said on Tuesday, unless it can prove progress in building the requested new copper smelter this week.
“From the financial point of view, Freeport should have no problem [to build a smelter]. But the progress isn’t visible until now. So, it is just a matter of will,” Sudirman Said told reporters in Jakarta on Tuesday.
Freeport Indonesia operates the fifth largest copper mine in the world and is the country’s largest gold miner.
Under a memorandum of understanding Freeport signed in July, the Arizona-based mining company, has a deadline of Jan. 25 to complete the land acquisition for the smelter that is planned to have a capacity of up to 300,000 metric tons.
In July’s MoU, Freeport agreed to pay a $115 million “assurance bond” to develop the smelter by 2017, Reuters reported on Tuesday.
Freeport reportedly plans to build a smelter in Gresik, East Java but an exact location is yet to be determined.
The company plans to build a facility capable of producing up to 500,000 tons of cathode copper with investment up to $2.3 billion.
“If on Jan. 25 there has not been any progress of the smelter then we can freeze concentrate export permits. I ask Freeport to look for solutions as we want Freeport to keep operating,” he said.
Freeport is necessary to national development, particularly in the country’s northern most province Papua, Sudirman said. Therefore, the government will give a contract extension to Freeport Indonesia after the current expiration of 2021.
The director general of mineral and coal at the ministry, R. Sukhyar, said the requirement for an export permit is to have at least 60 percent of the smelter constructed. The facility could take up to three years in construction, but the ministry reviews the progress every six months.
“If Freeport has purchased the land then we can say the progress reached 60 percent. Then we can issue an export permit for the next six months, but they have not acquired the land yet,” he said.
Separately, company spokeswoman Daisy Primayanti said Freeport has a strong commitment to building a domestic smelter.
“We always report on smelter progress to the ministry,” Daisy said.
“Freeport Indonesia is serious with its commitment. We are currently having intensive communication with the ministry and we certainly expect to keep doing export activities.”
Investor Daily
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