PT Freeport seeks for new export recommendation

Gold and copper giant PT Freeport Indonesia is seeking for a new copper concentrates export recommendation letter from the Ministry of Energy and Mineral Resources (MEMR).

This was said by MEMR Spokesman Sujatmiko on Thursday, but could not provide details about the request including on the export quota volume.

The export recommendation letter from MEMR is required for the company to be able to obtain export permit from the Ministry of Trade.

The MEMR in February of this year issued an export recommendation letter for PT Freeport with copper concentrates export quota of 1.1 million tons, valid for one year until February 2018. The company, however, has yet to start export as it is still in negotiations with the government over a number of issues. The company is also demanding for a lower export duty. Following the introduction of new regulation in January, the ministry imposes an export duty of 7.5 percent, higher than the previous duty of 5 percent.

The government issued a new regulation, and implementing rulings by the MEMR, in January of this year allowing miners to continue export of mineral concentrates for another five years but under certain conditions including converting their mining permit status from mining contract of work (COW) to special mining business license (IUPK), commitment to build domestic smelter, and paying higher export duty. While PT Freeport has agreed to convert into IUPK, the company demands that the new permit status to have similar fiscal and legal terms as set in the COW to help maintain its investment stability, a request which has been turned down by the government, triggering the current dispute between the two, causing PT Freeport to be unable to resume export of copper concentrates.

Current negotiations are expected to be concluded in October of this year. In the meantime, the government has issued a temporary IUPK for PT Freeport valid until October to allow the company to quickly resume export. PT Freeport, however, has yet to resume export as the company demands for the lower export duty. The ministry imposes the 7.5 percent export duty as progress of the company?s planned copper smelter in Gresik, East Java, has yet to exceed the minimum 30 percent requirement for a lower duty. (*)