SUMMARY
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JAKARTA, Indonesia – Mining giant Freeport-McMoRan Inc. remains at odds with the Indonesian government over approval for the export of its copper concentrates.
US-based Freeport has yet to reach an agreement with authorities over exportation rights for its Indonesian subsidiary, PT Freeport Indonesia (PT-FI).
Last month, the Indonesian government issued new regulations regarding the export of unrefined metals, including copper concentrates.
The rules require companies to commit to changing from a contract of work to a special operating license (IUPK), and to completing smelter construction within 5 years of gaining exportation approval.
In a statement, PT-FI said the government has also ordered it to “forgo its current rights to fiscal and legal certainty.”
The company said it is unable to accept these conditions, as under its current contract of work, it exports copper concentrate without restriction or payment of export duties.
According to PT-FI, in October 2015 the government said it would allow PT-FI to continue operating with the same rights it received under the contract of work once the new regulations were introduced.
A representative from the government has yet to comment on these allegations.
Negotiations
PT-FI also said it is aiming to negotiate a “mutually satisfactory replacement agreement” with the government that will allow it to continue to “[exercise] its rights as a company.”
The delay in obtaining rights to exportation will require PT-FI to take immediate action to reduce production to match domestic capacity at PT Smelting, the company’s 25%-owned copper smelter in Gresik.
The company says that as PT Smelting processes approximately 40% of its concentrate production, the delay in approval for exportation will force it to reduce its work force and spending with local suppliers, and to suspend investments on a new smelter.
The president of Freeport-McMoRan Inc., Ricard C.Adkerson and PT-FI’s President Director Chappy Hakim said in a joint statement that these changes are “disappointing” in the wake of negative impacts for the workforce at PT Smelting and the local economy.
“We encourage the government to enable our full operations to continue without disruption so these negative impacts can be avoided.” – Rappler.com
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