Govt may consider Freeport?s request to continue export next year

By Bambang Atmaja

Gold and copper mining giant PT Freeport Indonesia, the local unit of US giant Freeport McMoRan Copper and Gold Inc, may be allowed to continue exporting copper concentrates production after 2013 despite the government?s plan to ban mineral ores export starting next year.

?If miners have shown commitment to obey government regulation, such as starting to build smelter or cooperating with other firms by supplying raw materials for smelters, their proposal to continue exporting ores after 2013 would be put into consideration,? Minister of Industry MS Hidayat told Petromindo.com at the State Palace on Friday. ?We?ll see.?

As mandated by Mining Law No 4/2009, the government plans to ban the export of mineral oregns starting next year in a bid to generate greater value added from mineral resources in the country, requiring miners to build domestic smelters, or supply the ores with other investors building the smelters.

Freeport, which has been supply about a third of its copper concentrates to the country?s only smelter, in Gresik, East Java, has recently signed an Mou on the supply of copper concentrates with two companies planning to build smelters at home. Another copper giant PT Newmont Nusa Tenggara has also signed similar MoUs, while dozens of other mining companies have either started building domestic smelters, or at least have submitted smelter proposals to the government.

But as the planned new smelters will certainly not be ready in 2014 (they may be ready in 2017 if everything goes well), Freeport is left with uncertainty over the fate of its remaining copper concentrates output which could not be absorbed by the existing local smelter amid the government planned export ban.

Freeport Indonesia President Director said recently that his company would continue to lobby the government to seek for a dispensation as the domestic market could not yet absorb its entire copper output pending the completion of the planned smelters. Freeport has warned that if it would not be allowed to continue export next year, the company would have to drastically cut down production capacity, which conquently would create massive layoff.

Senior officials, at the Ministry of Energy and Mineral Resources, however, have previously stated that the government would not give Freeport any dispensation.

Editing by Reiner Simanjuntak