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Freeport could face $502m fine for smelter delay, BPK says
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PT Freeport Indonesia’s under-construction copper smelter at the Java Integrated Industrial and Port Estate (JIIPE) Special Economic Zone in Gresik, East Java, is seen in this undated picture. (Courtesy of PT Freeport Indonesia/-)
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T Freeport Indonesia (PTFI) may have to pay a US$501.94 million penalty for delays in the construction of its copper smelter, according to the Supreme Audit Agency (BPK).
The estimate is based on PTFI’s export sales data during the delay period after the gold and copper mining giant received a temporary exemption from the raw minerals export ban until May 2024.
“The BPK has calculated potential fines based on PTFI’s realized export sales data and obtained a potential value of administrative fines amounting to $501.94 million,” the agency wrote on Tuesday in a summary of the audit report for the first half of this year.
The BPK audit report said the potential fines were based on calculations of the actual physical progress of PTFI’s smelter, which did not match the agreement. The agency found that the six-month physical project verification report prepared by PTFI prior to changes to the development plan did not use the S Curve as a basis for verifying physical project work.
PTFI spokesperson Katri Krisnati said the smelter's construction plan was in accordance with the S Curve stipulation agreed with the government and actual construction progress was also in line with the agreement.
“Regarding the fines for the delay, we continue to coordinate with the government,” Katri told The Jakarta Post on Wednesday.
