Freeport Revenue Stabilize in 2023, Inalum Says

Translator:

Editor:

Mahinda Arkiyasa

  • Font:
  • Ukuran Font: - +
  • TEMPO.CO, Jakarta - Director of PT Indonesia Asahan Aluminium (Inalum) Budi Gunadi Sadikin, said that the production of Freeport Indonesia will stabilize in 2023. The gold mining company is projected to generate an annual net profit of USD 2 billion after 2023.

    Budi asserted that Inalum will receive USD 1 billion annually after Freeport's underground mine begin operation. Budi also expressed his optimism that Inalum will be able to pay off its debt despite the decreasing revenue from Freeport due to the inactivity of the Grassberg open pit mine. "So if we have USD 4 billion debt, it can be settled within four years, the interest is low, only 6 percent," Budi said at KAHMI Center on Wednesday, January 9, 2019.

    After the debt has been paid off, Budi added, the USD 1 billion annual income will be Inalum's profit. "[Freeport] will be in full production in 2023, and later it will stabilize," Budi said. "Let's not be angry if production decreases in 2019 and 2020, it is not because we ran out of mines," Budi stated.

    Budi further added that if when Freeport condition is stabilizing, the company will have a revenue of USD 7 billion(equals to IDR 98 trillion) per year. Furthermore, if the company’s operation has stabilized, ti will generate an annual revenue of USD 4 billion, or equals to around IDR 56 trillion).

    On a separate occasion, Director General of Mineral and Coal of the Energy and Mineral Resources Ministry Bambang Gatot Ariyono, said that Freeport’s earnings before interest, taxes, depreciation, and amortization (EBITDA) is predicted to decrease from USD 4 billion to USD 1 billion for this year.

    However, Bambang reiterated that the decrease is not caused by diminishing mineral reserves. The decrease was due to the inactive Grassberg underground mine.

    Bambang said that after the underground mine begin operation, Freeport’s earnings will start to climb. "Starting from 2020 and 2021 it will increase, and even further until 2025, 2025 [the earnings] will begin to stabilize," Bambang explained.

    As a result of the decrease, Budi said that Freeport will not distribute dividends for two years until 2020. "So we will not distribute dividends for two years, zero, until 2020," Budi said.

    Budi further explained that to operate Grassberg underground mine, Freeport requires an investment of USD 1.1 to 1.4 billion every year. "That's not including smelter," Budi said on Wednesday, January 9, 2019.

    CAESAR AKBAR