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Gov't mulls allowing mineral export due to smelters constraints

Jakarta Globe - April 4 2023

Investor Daily, Jakarta – The government is mulling allowing companies whose smelter construction is affected by Covid-19 to export unprocessed ores and partially processed minerals (concentrates) past the deadline on June 10, 2023.

The decision to allow ore exports beyond June 10 is still in finalization. According to Energy Minister Arifin Tasrif, the Covid-19 pandemic has hindered smelter construction completion. But the minister denied that giving companies a chance to export minerals past June 10 is a form of relaxation to the government policy.

"There is actually no need for relaxation. We are simply taking into account the Covid-induced delay [in the smelter project]. That is what we are finalizing," Arifin was quoted as saying by Investor Daily.

The government has begun assessing the Covid-19 impact on smelter construction since late 2022. But miners such as Freeport Indonesia and Amman Mineral Industri have long expressed their concerns, even since April 2020.

At the time, the government insisted on punctual construction completion. The government even sent a letter of reprimand to Freeport Indonesia in Sep. 2020. Freeport Indonesia had to pay a $57 million fine due to the delay in its smelter project.

The Energy Ministry has allowed Freeport to export 2.3 million tons of copper concentrates until June 10, 2023.

Freeport Indonesia president director Tony Wenas gave the latest updates on the project in a hearing at the House of Representatives on March 27. According to Tony, the company's smelter project in Manyar, Gresik, has reached 54.5 percent completion, exceeding the targeted 52.9 percent.

The project is set to finish later this December. It will then enter pre-commissioning and commissioning until May 2024. Production would begin in phases, and get into full swing on Dec. 2024.

"We are committed to finishing the smelter construction," he said.

The special mining permit, also known as the IUPK, given to Freeport stated that the miner should construct smelters no later than five years after the permit issuance in 2018. Freeport has also informed the government that the smelter could finish in 2024 or a year later than expected due to Covid-19.

Investor Daily reported that the IUPK permit also includes a force majeure provision regarding the smelter construction. In other words, smelters are expected to complete by 2023 provided there are no force majeure events. The government has declared Covid-19 as a non-natural force majeure. The permit also states that Freeport can still export concentrates during the construction of the smelter.

Source: https://jakartaglobe.id/business/govt-mulls-allowing-mineral-export-due-to-smelters-constraint