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Freeport wants to stay informed of investigation

PT Freeport Indonesia, a subsidiary of the US mining giant Freeport-McMoran Copper & Gold Inc

Amahl S. Azwar (The Jakarta Post)
Jakarta
Sat, June 8, 2013

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Freeport wants to stay informed of investigation

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T Freeport Indonesia, a subsidiary of the US mining giant Freeport-McMoran Copper & Gold Inc., has asked the government to clarify its ongoing probe into two incidents that took place in May at the firms'€™ facilities in Papua.

Freeport Indonesia president director Rozik B. Soetjipto said on Friday that the mining giant, one of the country'€™s biggest taxpayers, wanted to be kept up-to-date on the progress of the investigation so that it could predict when to resume mining operations.

'€œCertainly, when we resume production activities depends on the results of the investigation,'€ he said in a telephone interview.

Freeport was expecting to meet with officials from the coal and mineral division of the Energy and Mineral Resources Ministry in Jakarta to get updates on the investigation, according to Rozik.

However, he said, the company had yet to receive confirmation from the officials on when the meeting would take place.

As previously reported by The Jakarta Post, Freeport ceased operations at its mining complex in Papua following a tunnel collapse at a training facility near its Big Gossan mine site on May 14, in which 28 workers died '€” the company'€™s deadliest incident in Indonesia.

Freeport had planned to resume production activities at its Grasberg open-mine site to guarantee shipments of concentrates when, last Friday, a truck operator died after he was buried by wet ore material that flowed from an ore bin at the Deep Ore Zone (DOZ) underground mining facility.

The government consequently forbade the miner, which usually produces 220,000 tons of ore per day, from conducting any activity at its mining complex. Mining operations could only resume only after the government completes its investigation, which is expected to last three months.

In his visit to Jakarta last month, Freeport-McMoran CEO Richard Adkerson said Freeport'€™s current supply of concentrates would be able to fulfill the demand from their customers '€œfor several days'€.

The government formed an investigation team consisting of local mining experts under the leadership of Ridho Wattimena, current head of the mining engineering graduate program at the Bandung Institute of Technology (ITB), to inspect Freeport'€™s safety standards.

Ridho said that the investigation would last less than the three months predicted, indicating that Freeport could resume activities earlier than expected. '€œThe three-month period stated by Energy and Mineral Resources Minister Jero Wacik is not just for the investigation into the accident but for the entire investigation and inspection of all underground mining activities in Indonesia,'€ Ridho was quoted as saying by Reuters. '€œI don'€™t think [the accident] investigation will take too long,'€ Ridho said.

Freeport will unlikely meet its production target of 1.3 million troy ounces of gold by year'€™s end, up by 44.4 percent from the 900,000 troy ounces the mining firm booked in 2012, amid its operations shutdown.

Halting operations for three months would cut around 125,000 metric tons of copper or about half a percent from the global supply, according to Reuters estimates, which combined with other disruptions, could wipe out an expected small market surplus and boost global prices.

Separately, the Energy and Mineral Resources Ministry'€™s coal and minerals chief, Thamrin Sihite, told reporters in Jakarta that amid the ongoing probe, his office would also put pressure on Freeport Indonesia to wrap up its renegotiation process with the government.

Freeport is among mining giants that have yet to complete its contract renegotiations with the government.

The renegotiations, which must conclude by the end of the year, cover six main issues: an increase of royalty payments, the establishment of local smelters, the use of local goods and services, divestment, contract extensions and the size of mining areas.

Till now, Freeport has refused to increase its royalty payments and to have its working areas reduced to 25,000 hectares. It has also refused to build smelters to process ores locally despite the 2009 Mining Law, which will ban the export of unprocessed mineral ores starting in 2014.

Earlier this year, the company said that it may have to layoff workers next year should the government decline to amend the law.

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