US mining company Freeport-McMoRan (FCX) has reported that its Indonesian subsidiary PT Freeport Indonesia (PT-FI) is continuing to seek approval for the export of copper concentrates in line with its rights under the contract of work (CoW).
In a joint statement, FCX president and CEO Richard C Adkerson and PT-FI president and director Chappy Hakim said: “We have been actively engaged with Indonesian Governmental authorities to enable full operations at PT-FI to continue without disruption. This would be in the best interests of all stakeholders, including the Government of Indonesia, our large work force, the local community, local suppliers and Freeport’s shareholders.
“We are disappointed that this matter remains unresolved and are concerned about the negative impacts for all stakeholders, especially for our workforce and the local economy.
“We encourage the government to enable our full operations to continue without disruption and to provide the required assurances to support our long-term investment programs so these negative impacts can be avoided.”
Last month, the Indonesian government issued new regulations to address exports of unrefined metals, which include copper concentrates and anode slimes.
The new regulations allow copper concentrate exports for a five-year period through to January 2022, subject to multiple conditions, including conversion from a contract of work to a special operating licence (IUPK).
Furthermore, the new regulations require foreign IUPK holders to divest 51% to Indonesian interests no later than the tenth year of production.
All export licences will carry a one-year validity period, which will be reviewed every six months.
The new regulations also permit the export of anode slimes, necessary for PT Smelting’s smelter and refinery in Gresik, Indonesia.
As PT Smelting continues to seek its licence renewal, further delays are expected to significantly affect PT-FI’s operations.
The company has also informed the Indonesian government that it is prepared to convert its CoW to an IUPK if it receives equivalent rights with the same level of legal and fiscal certainty stated in CoW.
It has also informed the government that PT-FI is committed to develop a new smelter after it receives extension approval for its long-term operating rights.
The company stated that the government has not granted continuation of exports to date, with the government indicating that PT-FI needs to immediately convert to an IUPK to continue its concentrate export production, relinquishing its current rights.
PT-FI has informed the government that it cannot accept these conditions unless a mutually satisfactory replacement agreement is executed.
PT-FI claimed that continued delay will require it to reduce production, adjust its cost structure, decrease its workforce and suspend its investments on its underground development projects and new smelter.
Image: A mine under PT Freeport Indonesia. Photo: courtesy of PT Freeport Indonesia.