Government warns Freeport over smelter project

The Ministry of Energy and Mineral Resources has warned gold and copper giant PT Freeport Indonesia in a December 29 letter to quickly start developing its domestic smelter or risked its export permit suspended, Koran Tempo reported on Wednesday.

The paper quoted Director General of Mineral and Coal at the ministry R. Sukhyar as saying that Freeport has yet to decide the location for its planned smelter. He added that the company has earlier promised to build smelters in Gresik (East Java) and in Papua, both of which to be completed in 2017, just in time when the government plans to start banning export mineral concentrates.

?The warning letter was sent on Monday December 29. The deadline is January 25, 2015,? Sukhyar said, adding that the government also demanded for six-month evaluation report from the company in the letter.

Sukhyar said that the government would issue a new export permit for PT Freeport in February 2015 if the progress of the smelter project has reached 60 percent.

Meanwhile, PT Freeport President Rozik B. Soetjipto was quoted by Tempo as saying that the company wanted to get assurance from the government on its request for an extension of the company?s mining contract, which is set to expire in 2021, before the company proceeds with the construction of the smelter project.

He said that if the multi-billion dollar smelter is completed, by 2018 at the soonest, while the contract is set to expire in 2021, the remaining three years for the operation of the smelter would not be enough to obtain sufficient revenue to cover the investment cost.

Rozik said that to date the smelter project has reached the stage of technology review. The planned locations in Gresik and Papua have yet to be decided. ?Not certain yet. Getting the land permit also takes a long time,? he said. (*)