Indonesia Says Freeport Seeks to Delay Copper Smelter Payment

  • Indonesia has asked for $530 million toward a new smelter
  • Mining, milling operations at Grasberg site are normal

Freeport-McMoRan Inc. is seeking to postpone the payment on a new copper smelter in Indonesia as talks to extend an export permit near completion, said Energy & Mineral Resources Minister Sudirman Said.

“They have appealed for a delay or leniency, but we have asked them to show their commitment in an equivalent way,” Said told reporters in Jakarta on Tuesday. “It’s a normal process of negotiation.”

Indonesia has asked Freeport for a $530 million deposit on a new facility in return for the renewal of a permit to ship concentrates from its Grasberg mine in Papua. Copper capacity at Grasberg is second only to Escondida in Chile, according to the International Copper Study Group, while the company’s website says it has the single largest gold reserves in the world.

PT Freeport Indonesia, the local unit, is seeking permission to export 1 million metric tons over the next six months after its license expired on Thursday. Riza Pratama, a spokesman, declined to comment on the negotiations when contacted by mobile phone.

The producer says mining and milling operations are continuing normally and it’s confident the government will renew the permit. “We have no intention to end Freeport’s business,” Said said on Tuesday. “Although their permit has expired, it doesn’t mean operations must stop.”

Contract Talks

The country is renegotiating mining contracts with foreign companies, arguing that too much mineral wealth is disappearing overseas. The government has banned the export of ores to encourage domestic processing.

Indonesia will contribute 29 percent of Freeport’s copper sales this year, up from 18 percent in 2015, as the company plans to double sales from Grasberg to 1.48 billion pounds from 744 million pounds, the company said in a presentation last week.

Operations at Grasberg, in the mountains of Papua, have been plagued by labor strife in recent years. Workers seeking higher wages took strike action in 2011 and the mine was closed for months following a tunnel collapse in 2013 that killed 28 people. Exports were disrupted in 2014 after a dispute with the Indonesian government over export duties.

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