Freeport to Resume Copper Concentrate Export But It Has to Pay Higher Taxes

Jakarta. The Indonesian government will let Freeport sell copper concentrates overseas again despite its expired export permit, but the mining giant has to pay more in taxes, according to a minister.

Indonesia has banned exports of copper concentrates starting this year. The ban aims to expand the domestic processing capacity, so Indonesia can export goods of higher added value. 

Freeport has already built a smelter, which could refine 1.7 million copper concentrates a year, in East Java's Gresik. This facility was supposed to operate at full capacity by the end-2024, but caught fire last October.

Amid the renovations work to the damaged smelter, Freeport's executives have been nudging the government into letting the miner export 1.3 million tons of copper concentrates until December. The export ban, alongside the fire, has led to a huge pileup in its Papua warehouse. 

Mineral Resources Minister Bahlil Lahadalia revealed on Wednesday that President Prabowo had gathered his officials to discuss Freeport's fate. They agreed on a win-win solution.

That is to allow Freeport to export its copper concentrates, but the company will have to pay higher taxes in exchange.  Advertisement

"Freeport has even submitted an official written statement [that the smelter would start operating in June], complete with the police report and insurance. So we will give room [for Freeport to] export copper concentrates in phases," Bahlil told the press on the sidelines of the Indonesia Economic Summit in Jakarta.

Bahlil, however, did not specifically say until when this export relaxation would last. 

"But there are sanctions.

We will raise the export taxes on Freeport," Bahlil said.

The minister revealed that the government had factored in layoff possibilities, among others, when deciding whether to let Freeport ship overseas once again. The Indonesian government at present has a 51 percent stake at Freeport. Any problem related to its operations can take a toll on the state revenue.

"If Freeport's production stops, tens of thousands could get laid off.

It could also affect Freeport's revenue and eventually lead to a loss of state revenue. As the mineral resources minister, all that matters to me is for the [smelter] to go live soon," Bahlil said. Meanwhile, Freeport Indonesia's boss Tony Wenas had a meeting with the country's lawmakers that day.

Tony claimed that Indonesia could lose £4 billion in state revenue -- be it export duties, royalties, dividends and corporate tax -- if Freeport's export activities remain suspended.

The state loss could even top £5 billion with current prices.

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