Freeport told to make additional $530m deposit

By Thomas Sembiring

The government has requested gold and copper giant PT Freeport Indonesia to deposit another US$530 million in an escrow account as a form of its seriousness in developing the required domestic smelter.

Director General of Mineral and Coal Bambang Gatot Ariyono said on Friday that the company must show seriousness in developing the planned US$2.3 billion copper cathode smelter in Gresik, East Java, as part of the requirements for PT Freeport to be able to obtain extension of its copper concentrates export permit, which expires January 28.

PT Freeport has applied for an extension of the export permit, but the government has yet to approve the request amid slow construction progress of the planned smelter, which company officials acknowledged that the progress has so far only reached 30 percent, way below the minimum 60 percent requirement for obtaining extension of the export permit.

Given the slow physical construction progress, the government now wants PT Freeport to deposit the $530 million funds, adding to the $115 million the company had previously deposited.

The government has requested PT Freeport to build the domestic smelter, with a target for completion in 2017, when export of copper concentrates would no longer be allowed.

Editing by Reiner Simanjuntak