T

he status of the export permit extension for PT Freeport Indonesia remains unclear as the copper and gold miner has not responded to the government'€™s request for a deposit that will serve as a guarantee of the company'€™s commitment to complete its smelter development.

Freeport Indonesia, a subsidiary of US-based Freeport McMoRan Inc., currently holds a permit to export semi-finished copper concentrate until Jan. 28.

The Energy and Mineral Resources Ministry said last week that a recommendation for another six-month permit would be granted if the miner met two prerequisites in view of the sluggish development of its smelter in Gresik, East Java.

The prerequisites are a mandatory 5 percent export tax, which has been implemented for the past six months, and a surety deposit of US$530 million.

The ministry'€™s minerals and coal directorate general has argued that the $530 million was equal to the money the company should have spent on developing the smelter as scheduled.

'€œThe firm has yet to respond. To my knowledge, they are still working on it [the response],'€ said Mohammad Hidayat, the minerals director at the ministry, on Tuesday.

Freeport Indonesia'€™s director Clementino Lamury visited the mineral and coal directorate general on Tuesday but he declined to make a statement after the visit.

On Monday, representatives from Freeport Indonesia also attempted to meet Coordinating Economic Minister Darmin Nasution but the meeting was postponed.

Clementino had earlier claimed the smelter development in Gresik had progressed by 30 percent, which was calculated based on the planned disbursement of investment.

The company is developing the smelter as part of its efforts to meet the country'€™s downstream policy on minerals.

The government is monitoring the smelter development as the progress will determine the issuance of the export permit.

However, the progress of the smelter development is not as advanced as had been expected.

Freeport Indonesia said earlier that it planned to break the ground for the smelter development in July this year.

The company holds a contract of work to mine copper in Papua.

Its production usually amounts to around 2 million tons of copper concentrate. As much as 30 to 40 percent of the total production is sent to an existing smelter also located in Gresik. The remaining production is sent overseas.

Thus, any disruption to its exports could affect the company badly as sales to the existing Gresik smelter account for less than half of its production capacity.

The new smelter, which is expected to cost $2.1 billion, will be located near the existing one.

Tassia Sipahutar contributed to the story
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