JAKARTA (TheInsiderStories) - PT Freeport Indonesia (FI), a subsidiary of US giant copper and gold miner Freeport McMoRan, has submitted a proposal to the Indonesian government regarding changes of the Special Mining Business Permit (IUPK) that has been issued by the Energy and Mineral Resources Ministry. The proposal was submitted directly by the Executive Director of Freeport Indonesia Tony Wenas and Director of FI Clementino Lamury.
Freeport Indonesia spokesman Riza Pratama said the company is willing to change the status of the existing Contract of Work (CoW) into IUPK. However, FI wants the provisions of the CoW are inserted into the IUPK. The provisions are including the fiscal certainty and legal guarantees. However, he did not explain further about details of the proposal.
The directors of Freeport met with the Negotiating Committee of the Ministry of Energy and Mineral Resources (ESDM) at the team’s office at the energy ministry for about 15 minutes. The submission of the proposal was a follow-up of talks between the Indonesian government and Freeport last week. At that time the negotiating team reiterated the government’s position that FI receives IUPK which has been issued on Feb 10, 2017.
“We would change the IUPK if legal certainty and fiscal stability level are assured in the CoW,” Riza said in Jakarta, Tuesday (21/3).
Secretary General of the Ministry of Energy and Mineral Resources Teguh Pamudji said that the ministry will soon study the FI’s proposal. He, however, declined to disclose what the details of the proposal. “It is still sealed,” Teguh, the Chairman of the Freeport Negotiating Committee of the Ministry of Energy and Mineral Resources, said.
IUPK status provides an opportunity for Freeport to export copper concentrate. If it agrees with the status change, the company’s concentrate production will be running at 100 percent and end the company’s cost efficiency program, including layingg off workers.
At present, Freeport only produces concentrates up to 40 percent of its full capacity, and sends the output to PT Smelting in Gresik, East Java. Smelting has mineral refining facilities with a capacity of 1 million tonnes of copper concentrate per year. The remaining 60% of FI’s output are exported. Therefore, it currently caps its production to a maximum 40% in tune with the capacity of Smelting Gresik.
Freeport McMoRan Chief Executive Officer Richard C. Adkerson previously rejected the recommendation concentrates and IUPK export licenses issued by the Ministry of Energy. The official stance was expressed in a letter posted to the Minister Ignatius Jonan on 17 February.
Richard refused IUPK that has been issued because it did not assure fiscal and legal certainty as contained in the existing CoW. Whereas in a recommendation issued export permits by the Energy and Mineral Resources Ministry, Freeport is required to change the status of its CoW into IUPK in order to allow the company exporting its copper and gold. (HS)