Wednesday, January 21, 2015

1) Govt threatens to halt Freeport’s exports


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1) Govt threatens to halt  Freeport’s exports
Raras Cahyafitri, The Jakarta Post, Jakarta | Headlines | Wed, January 21 2015, 9:03 AM - See more at: http://www.thejakartapost.com/news/2015/01/21/govt-threatens-halt-feeport-s-exports.html#sthash.lYaFr5oY.dpuf
Giant copper miner PT Freeport Indonesia may once again lose its export permit, having, in the government’s eyes, shown no serious commitment to the required construction of a copper smelting plant.

Energy and Mineral Resources Minister Sudirman Said on Tuesday made known his distress at the lack of progress in the mining company’s planned construction of a copper smelter.

“Last night, I received a report that the company hadn’t even made a decision about the land that needs to be acquired,” he said, adding that the government would not hesitate to revoke the firm’s export permit if no progress had been made by the end of this month.

“According to the MoU, if there is no progress by Jan. 25, the permit to export copper concentrate will be frozen,” Sudirman told reporters on Tuesday.

He was referring to a memorandum of understanding (MoU) signed in July last year. The MoU highlights Freeport Indonesia’s principal agreement for the adjustments of its contract of work in Indonesia. The adjustment, which will have to be included in an amendment to the contract of work, also covers the firm’s obligation 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 January 2014, when the ban on raw mineral exports began to be implemented. Several major miners including Freeport lost their export permits as a result of the ban.

Following an outcry and fears of massive unemployment following the ban, the government relaxed the regulation and allowed semi-finished products, such as the copper concentrate produced by Freeport, to continue to be exported until 2017. The relaxing, however, came with an obligation for miners to build or cooperate in the building of smelters. The commitment also acts as a guarantee for the issuance of permits for semi-finished mineral exports.

The permit lasts for six months, meaning that the mining firms have to show progress on smelter development if they want their permits to be extended.

The Energy and Mineral Resources Ministry’s director general for mineral and coal, R. Sukhyar, said that the government wanted Freeport to continue its operations and its overseas shipment
because of the significant contribution it made to the Indonesian economy.

However, the government also required the company to abide by the law and fulfill its commitments, he added.

Minister Sudirman, meanwhile, predicted that the company’s top executives would lobby the new government to ease the smelter requirement.

“However, the government has several [regulations] on this, and the smelter is non-negotiable,” he said.

Freeport Indonesia spokesperson Daisy Primayanti said the company had informed the ministry regarding the progress of its smelter development.

“We are serious about our commitment and we are intensively communicating with the ministry. Of course, for now, Freeport Indonesia expects to continue to be able to export,” Daisy said. She did not detail the progress of the smelter development.

Freeport Indonesia recently surprised observers by appointing Maroef Sjamsoeddin, a former deputy chief of the National Intelligence Agency, as its new president director to pilot the firm through the currently troubled waters.
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