Freeport Indonesia cuts output by 60%
Wednesday, March 12 2014 - 02:49 AM WIB
PT Freeport Indonesia, the local unit of US-based Freeport McMoRan Copper & Gold Inc, has cut down ore production during the past two months of this year following the introduction of punitive export tax and tougher export requirements by the government.
Freeport Indonesia union official Juli Parorangan told Petromindo.com Wednesday that the company was adjusting the production to meet copper concentrate demand of the East Java-based smelter company PT Smelting, which it partly owns. Freeport allocates about 40 percent of its output to the smelter.
Juli, however, said that the company has not yet announced any lay off so far. ?The firm now directs more works on maintaining the mine rather than on production,? said Juli.
On February 24, President Director of PTFI Rozik B. Soetjipto told Petromindo.com that the company had nearly 150,000 tons of copper concentrate in its stockpiles which have yet to be exported following the introduction of the broad mineral export ban on Jan. 12.
Freeport Indonesia spokesperson Leddy Simarmata told Petromindo.com that ore processing rate at the company has stood at 112,000 tons per day or half the normal rate since mid January. Leddy said the company has been in talks with the government to seek solution so that it can return to the normal rate.
Despite the mineral ore export ban, the government still allows the export of six mineral concentrates including copper until 2017, giving reprieve to Freeport Indonesia and PT Newmont Nusa Tenggara, which account for more than 90 percent of the country?s copper concentrate output.
But these concentrates are subject to punitive progressive export tax of 20-60 percent. For copper concentrate, the export tax is set at 25 percent for this year, and to rise to 60 percent in 2016.
Freeport and Newmont have strongly protested the export tax policy, arguing that it is not contained in in their contracts of work signed with the government.
As part of the new export procedures introduced by the government, mineral producers must obtain export permit from the Ministry of Trade. To get that permit, the companies must get recommendation from the Ministry of Energy and Mineral Resources (MEMR), which require a number of conditions including a clear plan to develop smelter.
Freeport, which has teamed up with IDX-listed PT Aneka Tambang to carry out joint feasibility study for a planned smelter, has applied for the export recommendation from the MEMR.
Editing by Reiner Simanjuntak