Govt threatens to revoke Freeport export permits

JAKARTA. The Energy and Mineral Resources Minister Sudirman Said has warned the export permits for PT Freeport Indonesia could be revoked as the company has made no progress in fulfilling its commitment to build a smelter in the country.

"Last night, I received a report that even with regard to the land needed for the smelter, the company has yet to make any decision. Based on agreements under the MoU, if there is no progress by Jan. 25, the permits to export copper concentrate will be frozen," Sudirman told reporters in Jakarta on Tuesday.

He was referring to a memorandum of understanding (MoU) signed in August last year. The MoU highlights Freeport Indonesia's agreement in principle to adjustments in its contract of work in the archipelago. The adjustment also covers the firm's commitment to build a copper smelter in the country.

The establishment of the smelter is a consequence of the 2009 Mining Law, which requires all minerals to be processed and refined before being exported. Smelter development should have been completed by Jan. 2014, when the country started to implement the ban on raw mineral exports.

However, many companies did not obey the regulation, including Freeport Indonesia, the local unit of US-based Freeport McMoRan.

Due to an outcry and concerns about massive unemployement following the ban on mineral ore exports, the government relaxed the regulation and allowed semi-finished products, such as copper concentrate produced by Freeport, to continue to be exported until 2017.

The relaxation came with a requirement that the miners would build or cooperate with others to build smelters. The commitment was a guarantee for permits to export the concentrate.

The permits last for six months, meaning that the mining firms will have to show progress on their smelter development if they wish to see their permits extended. (Raras Cahyafitri)