PT Freeport Indonesia has responded to the issuance of the Special Mining Business License (IUPK) extension to the subsidiary of the US-based Freeport-McMoRan Inc.
“We will immediately plan the next steps following the issuance of Government Regulation (PP) No. 25/2024,” Agung Laksamana, Executive Vice President for External Affairs at PT Freeport Indonesia, said as quoted by CNBC Indonesia on May 31, 2024.
However, Freeport must comply with the conditions to obtain the extension, such as handing over a 10-percent stake to the Indonesian Government, so that Indonesian ownership in Freeport can become 61 percent from the current 51 percent.
In the regulation, there are a number of requirements for Freeport to obtain an extension after meeting the minimum set criteria. They include:
- Having domestic integrated Processing and/or Refining facilities;
- Having reserve availability to meet the operational needs of Processing and/or Refining facilities;
- At least 51 percent of the shares are owned by Indonesian participants;
- Having entered into a sale and purchase agreement for new non-dilutive shares amounting to at least 10 percent of the total number of shares owned by State-owned Enterprises (SOEs);
- Considering efforts to increase state revenue;
- Considering efforts to increase state revenue;
- Having new investment commitments at least in the form of further exploration activities and increasing the capacity of refining facilities, which have been approved by the Minister.
Currently, Freeport Indonesia has fulfilled several requirements in submitting an extension application. One of them is the majority share ownership of PTFI of 51 percent by the Indonesian Government.
Under the new regulation, Freeport Indonesia can also apply for an extension early without waiting for at least 5 years before the IUPK expires.
Previously, in 2018, the Indonesian government, through its SOE holding in the mining sector, MIND ID, had acquired a 51.23 percent stake in Freeport Indonesia, and the remainder was owned by Freeport McMoRan (FCX).
The Indonesian government’s acquisition of Freeport has reached US$3.85 billion (Rp55.8 trillion). Increase in shares from previously 9.36 percent to 51.23 percent.
This US$3.85 billion acquisition is expected to return on capital in 2024, faster than previously estimated in 2025.
Freeport Indonesia currently has natural resources reaching 3 billion tons and enough until 2050. Current production reaches 220,000 tons per day from the mine in Mimika, Central Papua.
Freeport Indonesia also then processes it into copper concentrate from a capacity of 3 million tons of concentrate per year, 1 million tons of which are sent to the copper smelter and processed into copper metal or cathode. Meanwhile, the rest will be exported.
In the future, Freeport Indonesia will send all concentrate to the smelter currently under construction, which can absorb processed concentrate reaching 1.3 million tons per year.
The company will soon complete the construction of a new smelter at the Java Integrated Industrial and Ports Estate (JIIPE), which is 93 percent complete, worth US$3 billion (Rp. 45 trillion) with a capacity to process 1.7 million tons of concentrate per year and produce 600,000 tons of copper cathode per year.
