PT Freeport has yet to resume normal operation

Courtesy of Freeport

Gold and copper giant PT Freeport Indonesia has yet to return to normal production activity despite a new government policy providing special treatment for the company to resume export of copper concentrates.

Bisnis Indonesia quoted PT Freeport Spokesman Riza Pratama as saying Thursday that the company has yet to apply for export permit as the plan is still being finalized. He said that the company is still undecided as to when it will resume export. ?Request for export is still being finalized. We only supply (copper concentrates) for PT Smelting,? he said.

According to Riza, the company?s normal ore production rate is around 180,000 tons per day. But as PT Freeport has yet to resume export, it only runs limited production activity at its giant Grasberg mine in Papua supplying concentrates to PT Smelting, which operates the only copper smelter in the country in Gresik, East Java. Smelting absorbs about 40 percent of PT Freeport?s output.

The Ministry of Energy and Mineral Resources in February has issued a recommendation letter for PT Freeport to be allowed to export copper concentrates with an export quota of 1.1 million tons for a year. The company is supposed to use the recommendation letter to get an export permit from the Ministry of Trade.

Minister of Energy and Mineral Resources Ignasius Jonan has also recently issued new Ministerial Regulation No 28/2017, allowing PT Freeport to have a temporary special mining business license (IUPK) while the company also maintains its current mining contract of work (COW).

Under a new government regulation introduced in January of this year, miners must among others convert their mining permit status from COW to IUPK to be allowed to resume export of mineral concentrates for another five years. PT Freeport, however, has demanded for the IUPK to have similar fiscal and legal terms including a nailed-down tax arrangement to help ensure its investment stability as set in the COW regime. The IUPK applies a tax system based on prevailing regulation arrangement. The government has rejected the PT Freeport request, trigging the ongoing dispute between the two. To help resolve the short-term export issue, Jonan then issued the new regulation, giving PT Freeport a temporary IUPK to allow the company to resume export, which has been suspended since January, while maintaining its current COW permit status. The temporary IUPK will be valid until October 10 of this year, by which time ongoing negotiations between the company and the government are expected to be concluded, and PT Freeport will decide on whether it would maintain the COW status or permanently convert into IUPK.

But despite the new regulation, seen by critics as giving special treatment to PT Freeport, the company has yet to decide on when to resume export.

Kontan said that PT Freeport is seeking for a higher form of regulation than a ministerial regulation before it agrees to resume export.

Meanwhile, Bisnis Indonesia said that to date, as the company has been unable to run production activity at normal rate, contractors have laid off around 2,300 workers, while PT Freeport suspended some 1,200 of its own workers. (*)