Freeport suspends production as it insists on nailed-down tax

Courtesy of Freeport

Gold and copper giant PT Freeport Indonesia has suspended production activity at its mining operation in Papua since end of last week as the company has not been able to resume export of copper concentrates which has been banned since January 12 due to lingering disagreement among others over taxation issue.

This was said by PT Freeport Spokesman Riza Pratama as quoted by Bisnis Indonesia and Kontan on Tuesday. He said that the company?s warehouse facility has been fully filled with concentrates output, prompting the company to suspend production since export has yet to be resumed.

It remains unclear as to when PT Freeport will resume export although the government late last week has already approved the special mining business license (or IUPK) for the company and another gold and copper giant PT Amman Mineral Nusantara. The government introduced a new regulation in January allowing mining firms to continue export of mineral concentrates including copper concentrates under certain conditions including the conversion of their mining permit status from mining contract of work (COW) into IUPK, and develop domestic smelters within five years.

Riza, however, said that the government to date has yet to approve the company?s request for investment stability agreement including fiscal and legal terms of the IUPK to be similar to those set in the COW regime. The company, for instance, has demanded for a nailed-down tax under the new IUPK similar to that in the COW regime,

?To date, there has been no agreement yet. Export remains banned due to the new regulations introduced in January 2017, which are against the rights of PT Freeport under a legally-binding contract with the government,? Riza said.

He reiterated that PT Freeport was willing to convert the COW into IUPK, but on curtained conditions including retaining the nailed-down tax system under the new permit. (*)