Indonesia’s mining ministry has recommended that Freeport McMoRan be issued a permit to export copper from its Grasberg operations in Papua province of eastern Indonesia. The recommendation will now be sent to the trade ministry, which has the power to issue export permits.
The announcement by a government official potentially ends a near two-week stoppage after the previous six-month permit expired last month. Freeport did not have its export permit renewed after becoming embroiled in a dispute over a smelter project that the government says has fallen behind schedule.
The mining ministry’s director general of coal and minerals Bambang Gatot, told reporters that the export permit renewal had already been recommended. However, the trade ministry told Reuters it had not yet received the recommendation while a Freeport Indonesia executive said the company had not heard of the ministry’s move either.
Typically once the trade ministry receives a recommendation from the mining ministry, renewal of an export permit is a formality.
Last week, a government official told Reuters the mining ministry was confident Freeport would be issued an extension of its copper concentrate export permit within days.
The Indonesian government asked the company to pay a US$530 million bond as a guarantee that it would complete construction of another local smelter in order to be given a new export permit.
Bambang Gatot told parliament this week that the mining ministry issued the recommendation for renewal of the export permit because of Freeport’s willingness to continue paying an export tax of 5%. He said the bond was still under discussion.
A lengthy export stoppage would have dealt a blow to Freeport’s profits and denied the government revenue from one of Indonesia’s biggest taxpayers. A prolonged interruption would also affect about 24,000 people working at Grasberg, potentially leading to unrest in a region where the government is trying to increase economic activity.