Freeport finally obtains export recommendation, higher quota
Wednesday, February 10 2016 - 01:00 AM WIB
The Ministry of Energy and Mineral Resources (MEMR) finally issued on Tuesday an export recommendation letter for gold and copper giant PT Freeport Indonesia although the company failed to fulfill a key requirement.
The export recommendation letter is necessary for the company to be able to get the six-month export permit from the Ministry of Trade after its previous six-month export permit expired on January 28. The ministry also approved a request by PT Freeport, a subsidiary of US-based Freeport McMoRan Copper & Gold Inc, to increase its export quota of copper concentrates for the next six months to 1 million tons from the previous quota of 775,000 tons.
Director General of Mineral and Coal Bambang Gatot Ariyono said that the ministry decided to issue the export recommendation letter after the company agrees to pay export duty of 5 percent.
The MEMR previously required PT Freeport to put a US$530 million deposit in an escrow account to be able to obtain the export recommendation letter. The deposit is seen as a form of its commitment to develop the promised copper smelter in Gresik, East Java, as construction progress of the smelter project has only reached 14 percent, well below the required 30 percent.
Following negotiation with PT Freeport, the government then agreed to drop the deposit requirement as the company faces difficulties in putting up the funds amid the lingering commodity downturn.
Bambang said that the government is confident that PT Freeport is committed to develop the required US$2.3 billion smelter.
Editing by Reiner Simanjuntak