Trade Ministry Approves Freeport`s Concentrate Exports Permit

TEMPO.CO, Jakarta - The Trade Minister last week approved the extension of T.00 copper concentrates export permit filed by Freeport Indonesia. The permit will be effective until February 16, 2018.

“Export approval letter has been issued,” the ministry’s director general of foreign trade Oke Nurwan told Tempo on the weekend.

Oke said that Freeport filed for the permit on April 21, 2017. The Energy Ministry has granted concentrate copper export of 1.13 million tons per year. The export recommendation has been given after the Energy Ministry issued a special business mining permit (IUPK) on February 10.

Read: Freeport Indonesia to Submit Appeal Following Export Ban

The Trade Ministry granted a lower export quota compared to Freeport’s concentrate sales realization last year. In 2016, based on a consolidated report received by the Trade Ministry, Freeport’s exported 1.17 million tons of copper concentrates to Japan, South Korea, China, India and the Philippines.

Freeport spokesman Riza Pratama said that the company will gradually increase its output. Freeport produced zero concentrates at the turn of the year as it halted exports and the copper smelting plant in Gersik had stopped operations. In March, the smelter built by Freeport and Mitsubishi resumed operations. “Our production [increased] gradually in line with the capacity that can be absorbed,” he said.

Read: Freeport to be Granted Export Permit Next Week

Earlier, Freeport had refused to export its concentrates since the Finance Ministry, through regulation No. 13/PMK.010/2017, requires the company to pay export duty based on the progress of smelting plant construction. Based on the regulation, Freeport is obliged to pay 7.5 percent in export duty. The export duty is imposed on companies who built less than 30 percent of planned smelters construction. Freeport’s smelter construction is halted at 14 percent since early last year.

Freeport has lately agreed to the terms set by the government. It, however, is allowed to pay only 5 percent in export duty. The amount is lower compared to that of required by the government in the previous term. Riza claimed that the government has agreed to the amount.

Read: Freeport Yet to Agree on Switch Over from Contract of Work

Energy Ministry business development director Bambang Susigit did not comment on the lower amount of export duty. He reasoned that the ministry’s recommendation is based on the laws and regulations.

The ministry’s secretary general Teguh Pamudji stressed that Freeport’s export permit will expire in October because the company is still negotiating a switch over from the contract of work (CoW) to a special business mining permit (IUPK). The negotiation will run for six months, starting early April. “If no agreement is reached, it will once again use CoW, no export will be allowed,” Teguh said.

ROBBY IRFANY