Freeport Indonesia's Gold and Copper Production Increases in 2023

CORPORATE STRATEGIC - JAKARTA. PT Freeport Indonesia's (PTFI) gold and copper production increased in 2023. According to Freeport-McMoran's (FCX) performance report, PTFI's gold production throughout 2023 reached 1.97 million ounces, an increase of about 10.01% year on year (yoy), where in 2022 gold production reached 1.78 million ounces.

Production increases were also recorded for copper commodities, which in 2023 reached 1.66 billion pounds, an increase of 5.93% yoy. In 2022, PTFI's copper production was recorded at 1.56 billion pounds.

From the sales side, for gold commodities, total sales in 2023 reached 1.69 million ounces, lower than the previous year's achievement of 1.81 million ounces.  

From copper commodities, sales in 2023 were recorded at 1.52 billion pounds, slightly down from the previous year's 1.58 billion pounds.

Freeport-McMoRan CEO Richard C. Adkerson revealed that the positive performance achievement throughout 2023 was supported by fully operational underground mines.

"We started ramping up (production) since 2019 and now it's fully operational," Richard said in the FCX 4Q 2023 Conference Call, quoted on Thursday (1/2).

In 2024, they predict that PTFI's consolidated sales can reach 1.7 billion pounds of copper and 2 million ounces of gold.

The production volume this year is also expected to be higher than the realized sales volume. One of the factors is that as much as 90 million pounds of copper are planned to be used to meet the needs of the Manyar Smelter in Gresik this year.

According to Kontan's note, PTFI has obtained approval for the Work Plan and Budget (RKAB) for 2024-2026 from the Ministry of Energy and Mineral Resources on January 9, 2024. In the RKAB, PTFI's production target for this year approved in the PTFI RKAB is about 1.4 billion pounds of copper and 1.6 million ounces of gold.

In the end of 2023 Freeport-McMoRan report, PTFI plans to apply for an extension of copper concentrate and anode sludge exports after the export permit expires in May 2024.

"PTFI is coordinating with the Indonesian government to obtain approval to continue exporting copper concentrate and anode sludge until the smelter project is fully operational and reaches the planned operating conditions," as quoted in the report.

In addition to coordinating export permits, PTFI is also still discussing the imposition of export duties. PTFI explained, the provisions in the Special Mining Business Permit (IUPK) state that there is no imposition of export duties for smelter construction that has exceeded 50%. 

The construction of the Manyar Smelter, which has now exceeded 90%, is expected to be considered in future assessments.

In the new export duty regulation, PTFI is charged an export duty of 7.5% for copper concentrate in the second semester of 2023. 

"PTFI has been charged an export duty of US$ 307 million in the second half of 2023, of which US$ 160 million was charged in the fourth quarter of 2023 based on the revision of the regulation," the report said.