PT Freeport Indonesia (PTFI) has responded positively to the Indonesian Government’s plan to grant Special Mining Business Permits (IUPK) for the company after 2041. Currently, Freeport permits is still valid until 2041.
Plans to increase shares in Freeport
As the Indonesian government decided to extend Freeport’s permits, it also plans to increase its stake in Freeport after the extension is officially granted. The Government plans to increase its shares to 61% following the extension.
Currently, Indonesia has acquired 51% of Freeport shares through a state-owned company holding group Mining Industry Indonesia (MIND ID).
The government’s decision to grant an IUPK permit extension to Freeport was made in relation to the progress in the construction of the abandoned Manyar smelter. One of the requirements for the extension is that the Manyar smelter must be completed if Freeport wants to receive an IUPK permit.
Another consideration was Freeport’s large copper reserves. In addition, the government has verified the progress of the construction of a copper concentrate smelter that Freeport had promised to complete in the JIIPE Special Economic Zone (SEZ) in Gresik, East Java. of 54.5% of
PTFI’s concentrate smelter has absorbed an investment of US$ 1.63 billion (IDR 24.25 trillion). Meanwhile, the total cost is estimated to reach US$ 3 billion (IDR 44.64 trillion). It is targeted that the smelter will be completed in December 2023.
Through the concentrate export permit, the government has provided a quota of up to 2.3 million tons by June 2023, higher than 2 million tons provided in 2022.
Criticism towards Freeport’s permit extension
The government’s decision to grant permit extension permit to Freeport, however, received a number of criticisms. Most of the criticisms are related to the Mineral & Coal (Minerba) Law, which mandates export bans. The government responded by stating that it is currently evaluating or reviewing the plan to stop copper concentrate exports.
President Joko “Jokowi” Widodo specifically, has been criticized heavily for ignoring the upcoming ban and ignoring efforts related to the downstreaming of the mineral industry.
Mulyanto, a member of Commission VII of the House of Representatives had asked the President not to be too quick in extending the IUPK permit for Freeport. He asked the President to pay attention to and evaluate permit extensions in accordance with the Minerba Law, and asked not to be swayed by sweet promises that are often denied.
“This will set a bad precedent of violating the law by the government for the umpteenth time. Because the mandate of the Minerba Law is very clear that applications for permit extensions are made no sooner than five years before the permit period expires and no later than one year before the permit period expires,” he said.
“If PTFI’s license period ends in 2031, then the application for an extension of the permit will be made no earlier than 2026. There are still three more years. Why should it be extended now? This is strange and raises unnecessary suspicions,” added Mulyanto.
So far, Freeport had requested permission to export mineral concentrates since 2014 for eight times under the pretext of building a smelter, which still has not been completed despite pressures and demands from the House of Representatives.
