Freeport still refuse to pay export duty

JAKARTA. PT Freeport Indonesia intensively lobbies the Indonesian government. After President Director of Freeport Rozik Boedioro Soetjipto lobbied Ministry of Finance (Kemkeu ) about the 25% levy of export duty on Monday (20/1), Chief Executive Officer (CEO) Freeport - McMoRan Copper & Gold Inc. Richard Adkerson visited Ministry of Industry, yesterday (29/1).

Adkerson also came over to Kemkeu after meeting with MS Hidayat, Minister of Industry. Adkerson said, Freeport still wants to do operations according to the contents of the contract of work. "We want to continue to work as usual,” He said, Wednesday (29/1).

According to Freeport, there is no duty charge based on the contract that is still held up in 2021. According Adkerson, with the obligation to pay the duty, not only Freeport mineral export business will be threatened, but also the Freeport workers could also lose their jobs.

In addition to refusing to pay export duty and threatened to layoffs if it cannot export because of the duty, Freeport is still reluctant to build a smelter. "Building a smelter is not easy. For large smelter, the fund needed may reach U.S. $ 2 billion," he said.

Freeport already has a plan to build smelter, namely PT Smelting Gresik in East Java. The US company has teamed up with a Japanese company, Mitsubishi to run the smelter.

In Smelting Gresik, Mitsubishi Materials has 60.5 % stake, PT Freeport Indonesia has a 25 % share, Mitsubishi Corp owns 9.5 % stake, and Nippon Mining and Metals Co Ltd has 5% stake. Freeport will supply 40% of its production of copper concentrate, while the rest is exported.

Responding to Freeport’s demand, MS Hidayat said, Freeport must ask Coordinator Minister of Economy Affairs Hatta Rajasa and Finance Minister Chatib Basri in that matter. "My answer to them is clear, they have to obey the down streaming provisions in the Mining Law," he said.

According to Hidayat , Freeport said they will commit to build the smelter if only they get duty relaxation. "I told them, they cannot do that,” he said.

Hidayat said, during the meeting, Freeport determined that the strength of the work contract law equal to an Act. "Hence, Freeport still wants to work according to the contract work and it is possible to bring the issue to arbitration. They want legal certainty,“ he added .

Sukhyar, Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources (ESDM) said, they will charge export duty on any Freport’s concentrate export. "The export duty is like collateral to coerce mine operators to build a smelter,” he said.

Sukhyar said, since Freeport’s export products is a processed mineral without purification, the government would also set export quotas. The volume of exports will be determined based on the amount of reserves, the amount of smelter capacity to be built or supplied to partners, as well as the technology used.