Freeport to start smelter construction in July, told to deposit additional funds
Thursday, January 21 2016 - 01:08 AM WIB
Gold and copper giant PT Freeport Indonesia (PTFI) said it plans to start construction of a US$2.3 billion copper smelter in Gresik, East Java, in July of this year as preparations are underway.
?The groundbreaking is planned for end of July of this year,? said Clementio Lamury, Executive President for Public Affairs at PTFI during a hearing Wednesday with the House of Representatives Commission VII on energy and mining as lawmakers lambasted the company for the slow progress of the smelter project.
Lamury said the company has just completed the engineering, procurement and construction contract of the project late last year, and is currently preparing the required land, including land reclamation process, for the planned project. He added the company has presented the environmental impact assessment study to the local village.
The government has required PTFI to complete the smelter project in 2017, by which time the company would no longer be allowed to export copper concentrates.
Separately, Minister of Energy and Mineral Resources Sudirman Said acknowledged on Wednesday that progress of the PTFI smelter project has been slow.
He said that to date, construction progress has only reached 14 percent, far lower than the required 60 percent progress that the company must achieve in order for the ministry to approve its request for an extension of its current copper concentrates export permit, which expires on January 28.
To compensate for the slow construction progress, Sudirman said that he would send a letter to PTFI requiring the company to deposit additional funds with an escrow account at a state-owned bank to prove its seriousness and commitment in developing the smelter. The additional funds will be a new key requirement for an extension of the company?s export permit, he added, but did not say how much additional funds that must be deposited by the company.
PTFI has already deposited $115 million, or 5 percent of the total $2.3 billion investment requirement of the smelter project.
Sudirman said that PTFI must respond to the request before January 28, when the current export permit expires.
Editing by Reiner Simanjuntak