Freeport Agrees to Buy to Local Capital Goods

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  • TEMPO.CO, Jakarta – The government has asked PT Freeport Indonesia to use domestic products after decades of importing its capital goods for production. Freeport spends Rp15 trillion (US$1.25 billion) on capital goods each year. 

    “I’ve been negotiating [over domestic capital goods] with Freeport’s CEO. And now, the company agrees [to buy domestic capital goods],” Industry Minister M.S. Hidayat after signing the memorandum of understanding with PT Freeport Indonesia on Tuesday, October 14, 2014. 

    Hidayat added that the Industry Ministry would provide Freeport with the list of capital goods that can be produced in Indonesia. Certainly, not all of Freeport’s capital goods can be produced in Indonesia, particularly those related technology that is not yet available in Indonesia. However, Hidayat said, domestic products would at least be prioritized by Freeport when procuring capital goods. 

    “If we can provide at least half of Freeport’s necessities, that will be good enough,” he said. 

    Hidayat explained that the prioritization of domestic capital goods would also apply to Freeport’s smelters.

    To date, Freeport has yet to confirm the location for its smelters. The decision will depend on the company’s business strategies.

    “But they have to decide it soon,” Hidayat said.