Freeport Indonesia Promises to Build Copper Smelter in mid-2020 - Photo by PT Freeport Indonesia
JAKARTA (TheInsiderStories) - Gold and copper miner, PT Freeport Indonesia (PTFI) is predicted to generate a profit of US$2 billion in 2022, said senior official yesterday (01/09). As we know, the acquisition process of the PTFI’ majority shares to PT Indonesia Asahan Aluminum (Inalum) was completed on Dec. 21.
The Inalum’ CEO Budi Gunadi Sadikin said the reason that PTFI could be profitable because the gold reserves are still quite large and Grasberg Open Pit it will soon run out in this year. Moreover, he added, there are other copper and gold mines in the PTFI area such as the mining area with the name Cat Liar and Block B which until now have not been excavated.
On the environment issues, Indonesia’s Ministry of Living Environment and Forestry has asked PTFI to complete ecosystem and tailing management studies this year. According to Inspector General at the ministry, Ilyas Assad, the studies has been started this month, and expected to finished before end of 2019.
Assad added, PTFI’ tailing waste has a huge potency for Papua development. For an example, it can be used for brick-making. Even a company—which he ignored to named—has eyed Freeport’s tailing waste and planned to absorb 20,000 tons of tailing waste daily.
As the miner’ concentrate export license to end, Energy and Mineral Resources ministry vowed to extend PTFI’ license. But Director General of Mineral and Coal at the EMR ministry, Bambang Gatot Ariyono also asked the company to soon decide the smelter development location.
The Government expected the smelter location would be in Gresik in East Java. PTFI has an obligation to build a copper smelter with a capacity of 2 to 2.6 million tons per year and it is expected to be completed in less than 5 years.
Since 2014, President Joko Widodo has declared his intention to acquire majority shares in PTFI during his presidential election campaign. The change in share ownership will officially occur after a payment transaction of $3.85 billion to FCX in January 2019.
Inalum has secured $3.8 billion short-term loan facility from a syndicate banks led by Bank of Tokyo Mitshubisi to pay 51 percent of PTFI divestment shares. Then to pay this debt, the miner issued global bond with same amount anf use it to pay PTFI’ shares.
Based on the government agreement with US’s miner on August 29, 2017, the settlement of PTFI’s problems was carried out through four agreements that must be resolved simultaneously, namely changes to the legal basis of the Contract of Work to the Special Mining Business License which is followed by an extension of the operation to a maximum of 2×10 years until 2041.
Next, the obligation to build a smelter for five years or not later than January 2022. Assuring the stability of state revenue is greater than revenue through the CoW and the divestment of PTFI’s shares was 21 percent. Indonesia government and FreeportMcmoran Gold & Copper Inc., (NYSE: FCX) made an agreement to complete the contract renegotiation between the two sides in 2018.
Grasberg, located in Papua, is one of the world’s largest copper and gold mines. Freeport has been mining Grasberg since 1967 and received a contract extension in 1991. Its operation was based on a contractual scheme called mining contract of works, which the government has phased out since the introduction of new mining law in 2009.
PTFI has proven and probable reserves for copper of 38.8 billion pounds, gold of 33.9 million troy ounces and silver amounted to 153.1 million troy ounces.
Written by Staff Editor, Email: theinsiderstories@gmail.com
