Freeport production continues to decline

Owing to the collapse of its Wanagon tailing disposal site, copper and gold mining giant PT Freeport Indonesia has cut its daily production level to between 185,000 tons and 200,000 tons of copper and gold ore per day, as required by the government.

"Currently, we are abide by the government's request. We are committed to reducing our production," Freeport's vice president for communications Yuli Ismartono told reporters on the sidelines of a hearing with the House of Representatives' Commission VIII on mines and energy on Wednesday.

According to Yuli, Freeport normally produced 230,000 tons of ore, still far from the 300,000 ton level agreed with the government. However, Yuli said Freeport's production level would likely continue to decline due to the limitation of tailing disposal site.

Before the closure of Wanagon, Freeport normally disposed 95 percent of its huge tailing to the Wanagon, and only 5 percent to the Cartenz field. Because of the collapse of the Wanagon, that claimed a number of lives, Freeport is not anymore allowed to dispose its tailing to Wanagon, but only to Cartenz.

If the government did not soon open the Wanagon field, Yuli said, Freeport was likely to cut further its production level to a sustainable level considering the limited tailing disposal site in the Cartenz field.

"Freeport's total production can drop to 100,000 tons level per day because of the limitation in the Cartenz field as a place to dispose our tailing," she said. "For how long will Freeport continue producing below capacity? We don't know. It depends on the results of the evaluations, conducted together by Freeport and the government."

Meanwhile, legislators at the House of Representatives' Commission VIII demanded Freeport's parent company in the U.S., Freeport McMoran, to divest until 51 percent of stake in Freeport Indonesia to the government or local entity as stipulated clearly in its contract of works.

Legislator Priyo Budi Santoso and Pramono Anung both demanded that Freeport McMoran divest its ownership and not take cover from the Government Regulation No. 20/1994, or better known as PP 20, that guaranteed 100 percent ownership by foreign investors in the mining industry.

Both Priyo and Pramono warned that if Freeport did not heed their calls, they would press the government to revoke PP 20.

Responding to Priyo and Pramono's requests, Yuli responded that Freeport would always abide by the law, and therefore, if the government revoked PP 20, the company was prepared to discuss the divestment issue with the government.

But so far, Yuli said, the government had never asked Freeport about the possibility of increasing its ownership in the company. The government currently owns 9 percent stake at Freeport Indonesia, Indocopper owns 4 percent, and the remaining 87 percent is controlled by Freeport McMoran. (*)