Gold and copper giant PT Freeport Indonesia cannot complete its smelter construction in Gresik, East Java, by December 2023 even though the government may impose sanction if the company failed to do so.
Director General of Minerals and Coal of the Ministry of Energy and Mineral Resources, Ridwan Djamaludin, said the government already received a letter from Freeport, saying the company’s smelter would not be completed in December 2023.
“We have not responded to the letter that it [the smelter] could be completed at any time. We have not refused either. We are currently reviewing and considering the matter,” he said on January 31, 2023.
President Joko “Jokowi” Widodo announced the ban on raw mineral exports on January 10, 2023. The government already banned the export of nickel, followed by bauxite and then copper that would be effective by June 2023. It plans to impose sanction if the company fails to comply with the requirement.
According to Executive Director of Indonesia Mining Association (IMA) Djoko Widajatno, Freeport’s smelter was 52.7% complete.
Freeport Indonesia is developing a smelter that can turn copper concentrate into cathodes with a capacity of 1.7 million tons per year. The smelter will cost about US$3 billion. The funds for the smelter would come from a loan and the company’s equity.
Considerations for next step
Djamaludin said the government was aware on the COVID-19 pandemic’s impact to Freeport in developing its copper smelter. Therefore, the government is reviewing the pandemic related and unrelated obstacles. “We are evaluating the matter and we will report to our leaders,” he said.
He explained that the government would consider all aspects before making a decision to ban Freeport from exporting copper.
“What is the most beneficial policy [for the country]? It should be the principle for all parties. The state and the government hope everything will bring the most benefits,” he added.
Read also: Government’s plan to ban copper exports may cause 40,000 jobless
Djamaludin said the government has not decided to allow Freeport to continue the export of copper concentrates after the June 2023 ban. The government would take into consideration on the efforts and expenses of the company.
“We know that Freeport has invested a certain amount of money and the progress of its smelter has reached above 50%. Should we stop the construction or we ask the company to continue the smelter with certain obligations?” he added.
Freeport spokesman Riza Pratama has not responded to Indonesia Business Post‘s question.
