Freeport fails to obtain extension of export permit

Gold and copper giant PT Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Copper & Gold Inc, failed to obtain extension of its export permit, which expired Thursday.

Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources (MEMR) Bambang Gatot Ariyono said that PT Freeport could not obtain extension of the export permit from the Ministry of Trade because the MEMR has not provided the necessary recommendation letter as the company could not fulfill the requirement to deposit an additional US$530 million funds as proof of its seriousness in developing the required domestic smelter.

During a meeting with the ministry on Thursday, PT Freeport appealed to the government to ease the requirement taking into account the company?s current financial condition which has been affected by the lingering commodities downturn. He said that both sides will try to find a solution.

Bambang, however, did not specifically said whether PT Freeport?s export has been suspended as the authority in suspending export lies with the Directorate General of Excise and Customs.

PT Freeport is required to renew its export permit every six months. The MEMR has set a number of requirements the company must meet to obtain the necessary recommendation to get extension of export permit particularly significant progress in developing the planned US$2.3 billion copper smelter in Gresik, East Java. One of such requirements is that the construction progress of the copper smelter must reach 60 percent.

But as the progress has been quite slow, the MEMR has come up with another requirement to show the company?s seriousness in developing the smelter, by requiring PT Freeport to deposit another $530 million in an escrow account on top of the $115 million already deposited by the company in 2014. (*)