(Adds more Freeport comments, background)
JAKARTA Aug 7 Freeport-McMoRan Inc's
Indonesia unit will complete on Thursday loading for its first
copper concentrate export shipment since new mining rules were
introduced in the Southeast Asian nation, the unit's CEO said.
Production at its Grasberg mining complex is already back to
normal levels, Freeport Indonesia CEO Rozik Soetjipto said.
Freeport clinched a deal with the Indonesian government late
last month to end a six-month dispute over a controversial
escalating tax on metal concentrates that halted all export at
one of the world's biggest copper mines.
Earlier this week, the Arizona-based firm said it would
resume copper concentrate exports on Wednesday, with an initial
shipment of 10,000 tonnes to China.
"Concentrates that have been stockpiled for months (had)
hardened, which slowed the loading process," Rozik said on
Thursday. "At 1500 today, the loading will be finished ... we
still don't know if we can ship today or tomorrow morning, but
it is supposed to be today."
Rozik did not give an estimate for concentrate exports for
the year, and a company spokeswoman was unavailable for comment
Mining ministry and central bank officials forecast that
Freeport will now export between 750,000-756,000 tonnes of
copper concentrate in the second half of 2014, worth $1.5
The export tax was part of moves to force all miners to
develop local mineral processing facilities, which would bring
bigger returns for the government from Indonesia's mineral
But mining industry executives in Indonesia have balked at
the idea of developing downstream industries and building
smelters, citing a lack of power and infrastructure in remote
areas where mines are often located.
The escalating tax on metal concentrates kicked in at 25
percent and rises to 60 percent in the second half of 2016,
before a total concentrate export ban in 2017.
Under a revision of the tax, Freeport will now pay a 7.5
percent duty on its copper concentrate exports, but that rate
falls as it spends on its smelter, hitting zero once investment
in the project exceeds 30 percent of total cost.
Freeport currently smelts some 30 to 40 percent of its
output from its Grasberg mine at a copper smelter in Gresik,
The firm is now looking at potential smelter construction
sites in Gresik and Papua, with land acquisition costs likely to
be around $100 million, said Rozik, adding that he hoped that
ground-breaking would take place this year.
Freeport previously worked on a feasibility study for a
copper smelter with Indonesia's Aneka Tambang (Antam),
and Rozik said the state-owned miner may help with permit
applications and construction.
Talks with possible partners for financing the smelter
project are ongoing, he added, with both Antam and Newmont
Mining Corp involved in the discussions.
Newmont, which runs the Batu Hijau copper and gold mine, has
adopted a tougher approach to resolving the export tax dispute
by filing for international arbitration.
Indonesian Mining Association Executive Director Syahrir
Abubakar urged Newmont on Thursday to withdraw its arbitration
(Additional reporting by Yayat Supriatna and Adriama Nina
Kusuma; Reporting by Wilda Asmarini; Writing by Michael Taylor;
Editing by Muralikumar Anantharaman)