ILLUSTRATION. Freeport Indonesia’s underground copper mining tunnel in Grasberg Papua
Reporter: Ridwan Nanda Mulyana | Editor: I knew Laoli
KONTAN.CO.ID – JAKARTA. Freeport has again evaded its obligation to build a new copper smelter in accordance with the Mineral and Coal Law (Minerba Law) and the Special Mining Business Permit (IUPK) agreement it received in December 2018.
After PT Freeport Indonesia (PTFI) President Director Tony Wenas touted that the construction of the new copper smelter was a loss project and wanted the completion schedule to be postponed for a year to 2024, now it is the turn of Freeport McMoran (FCX) Chief Executive Officer Richard Adkerson to express his reluctance to build. new smelters.
Adkerson said that instead of building a new smelter, his party offered another alternative. FCX, which holds 49% of PTFI shares, proposed an option to expand the existing copper smelter, namely PT Smelting in Gresik and add a precious metal factory in it.
“As an alternative, instead of building a new smelter (it is better) to expand the capacity of the existing smelter and add to the precious metal factory,” Richard said in a conference call in the third quarter of Freeport McMoran, quoted on Tuesday (27/10).
Responding to Freeport’s wish, the Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Ridwan Djamaluddin emphasized that until now, the government’s position has remained the same. Namely, demanding that Freeport build a new smelter as required by the Minerba Law and the agreement in the IUPK.
“That’s right (still building a new smelter in accordance with the Minerba and IUPK Law). That’s the response,” Ridwan said when contacted by Kontan.co.id, Tuesday (27/10).
Ridwan also revealed information about the impact if Freeport built a new smelter, and if it didn’t. There are several aspects of revenue and value added contributions that are compared to the construction of this Freeport copper smelter.
This assumption is based on the smelter capacity of 300,000 tonnes of cathode absorbed by the domestic plus a 10% growth in consumption per year. This calculation is also based on projected revenues for the 17 years of operation
Ridwan informed that in terms of total mining revenues, if the smelter does not build, the total will be US $ 24.80 billion. If a smelter is built, it will decrease to US $ 21.20 billion.
Likewise, total state revenue from the upstream side will drop to US $ 43.70 billion when the smelter is built. If we don’t build a smelter, the total upstream state revenue is projected to be US $ 46 billion.
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