JAKARTA (TheInsiderStories) – Gold and copper miner, PT Freeport Indonesia (PTFI) proposed an additional quota of concentrate production of 200-300 thousand tons, this is in line with the optimization of the Grasberg mine by the company.
During the first half (1h) of 2019, the local unit of United States miner Freeport McMoRan Inc. (NYSE: FCX) utilized its approved export quota of approximately 180 thousand dry metric tons of concentrate for the current export period, which expires March 8, 2020. This amount is far lower than the quota in the previous year which reached 1.25 million tons of concentrate.
Because PTFI’ production is expected to drop dramatically this year along with the transition from the mining process from open-pit mining to underground mining. FCX’ Executive Vice President & Chief Financial Officer Kathleen L. Quirk said the decline in production had been predicted. However, his party believes that production for export rations can be higher than the quota given.
“So, we submitted an application for export quota renewal. We want to get certainty of space for exports because there is a possibility that production from open mining can be higher than projections, around 40 thousand tons of concentrate,” Quirk said at the Second Quarter Conference Call held on late Wednesday.
Energy and mineral resources ministry’s director-general for mineral and coal, Bambang Gatot Ariyono, said his party was processing and evaluating the company proposal.
“PTFI requests an additional quota of up to 300 thousand tons. The amount submitted is in line with the production quota amount that is to be added. The proposal is being processed and evaluated,” Ariyono told media in Jakarta on Thursday (07/25).
Ariyono said, for the decision whether the permit would be given or not targeted in August, along with the approval of the revision of the work plan and national budget.
PTFI continues to mine the final stages of the Grasberg open pit. During second-quarter (2q) 2019, PTFI opened an additional area to extend mining in the Grasberg open pit into third-quarter and potentially longer. The mine sequencing changes in the open pit delayed access to the high-grade material previously expected to be produced during 2q, but are expected to meet previous estimates for copper and gold production for the year 2019.
Meanwhile, in the 2q operating and performance report, the copper production of the Grasberg mine in 1h of 2019 was 270 million pounds or fell 58.97 percent of production in the 1h of 2018 to 658 million pounds.
The decline in production also occurs when viewed quarterly, amounting to 63.98 percent from 347 million pounds in the 2q of 2018 to 125 million pounds in the 2q of 2019.
The decline in copper production had an impact on sales which fell 48.81 percent to 325 million pounds in the 1h of 2019 compared to the same period last year of 635 million pounds.
When compared quarterly, copper sales also decreased by 52.21 percent in the 2q of 2019 to 151 million pounds compared to the same period last year of 316 million pounds.
Not only on copper but gold production also experienced similar conditions. Gold production in the 1h of 2019 was recorded at 316,000 ounces, down 76.32 percent compared to the same period last year of 1.33 million ounces.
Quarterly calculations also decreased by 79.18 percent in the 2q of 2019 compared to the same period last year of 740,000 ounces to 154,000 ounces.
In direct proportion to the decline in production, gold sales also declined by 67 percent in 1h of 2019 compared to the same period last year from 1.27 million ounces to 420,000 ounces.
Likewise with quarterly calculations where gold sales were recorded at 185,000 ounces in 2q 2019 quarter or fell 72.4 percent compared to the same period last year of 671,000 ounces.
PTFI‘ production is estimated to begin to increase significantly in 2021 as the development of underground mines progresses. The companies projected sales volumes and unit net cash costs for the year 2019 are dependent on a number of factors, including operational performance, mine sequencing changes, the timing of shipments and export quotas.
Written by Lexy Nantu, Email: email@example.com