PT Freeport to soon resume export

Petromindo|Thomas

Gold and copper giant PT Freeport Indonesia is expected to soon resume export of copper concentrates, following two months suspension, as the company on Friday finally applied for export permit with the Ministry of Energy and Mineral Resources, reports said Saturday.

PT Freeport Spokesman Riza Pratama confirmed that the company has applied for the export permit, made amid a two-day visit by US Vice President Mike Pence to Indonesia. PT Freeport is a subsidiary of US giant Freeport McMoRan Inc.

The company filed for the export permit after Minister of Energy and Mineral Resources approved in a recent MoU the company?s request for a 5 percent export duty, lower than the 7.5 percent duty set under the current ministerial regulation. The 5 percent export duty is valid until October of this year, by which time the government and PT Freeport are expected to have concluded current negotiations over a number of key issues following the introduction of a new government regulation in January of this year.

In February, the ministry issued the required export recommendation letter for PT Freeport with an export quota of 1.1 million tons. The ministry also issued a temporary IUPK mining business license for PT Freeport, which will also be valid until October, to allow the company meet the new required mining permit status to be able to resume export (PT Freeport has insisted on operating under the mining contract status, or COW, unless the government agrees to apply similar legal and fiscal terms as set out in the COW regime in the new IUPK permit). The company, however, did not immediately apply for export permit as it was seeking for a lower export duty.

The export duty is attached to progress of construction of required domestic smelter. PT Freeport is planning to develop a copper smelter in Gresik, East Java, but progress so far has been only around 14 percent. According to existing ministerial regulation, smelter project whose project is less than 30 percent is subject to export duty of 7.5 percent. The ministry will review PT Freeport?s smelter project in October. (*)