Grasberg Mine - Photo by Freeport Mcmoran

JAKARTA (TheInsiderStories) – Gold and copper miner, PT Freeport Indonesia (PTFI) plans to increase the investment value of US$15 billion in Grasberg underground mining until 2041, from now has reached a total investment of $8 billion. It means PTFI will invest almost $1 billion annually.

In a special interview with CNBC Indonesia, President Director PTFI Tony Wenas said, until the end of this year, PTFI would have 100 percent underground mining.

He explained, the Grasberg open pit mine is at an altitude of 4000 m with an ore shape down. Projected, amine with a diameter of almost 4 Kilometre (Km) and 1.2 Km deep, will be completed so that it can start operations in 2021.

“So under the open-pit mine that we have developed from 2004, 15 years later we will start full production, so if we look at the length of the tunnels in the underground mine it is 700 Km long, the shape is spiral, there is a cross, stacked. And this is one of the largest underground mines in the world,” he said in Jakarta, last week.

According to Wenas, underground mining requires time for full production to be able to produce back to normal levels, at least within the next two years. Now it is still producing 110-120 thousand tons of oil per day.

Meanwhile, seeing the current reserves of 1.8 billion tons, the Grasberg mine can still be mined more than in 2041. With the addition of 150 thousand tons per day, reserves are available for 32 years but with this note, there is no further exploration.

After officially divested at the end of last year, the government has issued a Special Mining Business License, replacing the work contract, with a period of up to 2041. Obligations, legal certainty, and stability of PTFI’s taxation have been regulated in the license.

With changes in the licensing nomenclature, the government, in accordance with the Oil and Energy Mining Law, will receive more PTFI contributions, especially the regional government because there is one component, namely 6 percent of PTFI’s net profit for the regional government.

Last year, PTFI’s contribution to total taxes, royalties and dividends amounted to $2.2 billion. While the indirect benefits are $3 billion, so the total state revenue becomes very large. From 1992 to 2018, the total benefits received by the government were almost $20 billion.

PT Indonesia Asahan Aluminium‘ President Director Budi Gunadi Sadikin once said PTFI would make a lot of profit for Indonesia in the next 4 years, estimated at $1.8 billion, far greater than the revenue in 2018 which was the only US $180 million. Only in 2021 and 2022 did Freeport contribute to each country around $470 million.

Starting in 2022, there will be an additional metal strip equivalent to $900 million. It is known, the Freeport mine has the potential value of gold and copper of $170 billion. In addition, PTFI has an annual EBITDA of $4 billion and net income after 2022 worth $2 billion.

Written by Staff Editor, Email: theinsiderstories@gmail.com