New Mineral Export Regulations Give Freeport a ‘Red Carpet’?

TheMinistry of Energy and Mineral Resources (ESDM) has just issued a new regulation regarding the recommendation of metal mineral overseas sales during the Covid-19 pandemic.

This is stated in the Minister of Energy and Mineral Resources Decree No.46.K / MB.04 / MEM.B / 2021 stipulated by the Minister of Energy and Mineral Resources Arifin Tasrif on Friday, 12 March 2021.

Based on this Ministerial Decree, holders of Mining Business Permits (IUP) and Special Mining Business Permits (IUPK) can still be granted a recommendation permit for metal mineral export approval even though progress in the construction of processing and refining facilities (smelters) has not yet reached the specified target.

The ESDM Ministerial Decree certainly benefits one of the IUPK holders, PT Freeport Indonesia.This is because, as of January 2021, the realization of PT Freeport Indonesia’s copper smelter construction is still at 5.86% of the target should have reached 10.5%.The costs incurred were only US $ 159.92 million.

The export recommendation for PT Freeport Indonesia’s copper concentrate which was issued a year ago ends on March 15, 2021.

In this Ministerial Decree, it is stated that “Metal mineral Production Operation Mining Permit (IUP) Holders and Special Mining Business Permit (IUPK) Metal mineral Production Operations that do not meet the percentage of physical progress in the construction of refining facilities are at least 90% in two periods of evaluation of physical development progress. refining facilities since the stipulation of Presidential Decree No.12 of 2020 concerning the Determination of the Non-Natural Disaster of the Corona Virus Disease 2019 (Covid-19) as a National Disaster, recommendations for export approval can be given. “

In addition, it is also stated that “Holders of metal mineral Production Operation Mining Business Permits and Metal mineral Production Operation Special Mining Business Permits as referred to in the KESATU Dictum are still subject to administrative fines from the cumulative value of sales abroad during the evaluation period as referred to in the FIRST Dictum by considering the impact of the Corona Virus Disease (Covid-19) pandemic. “

This Ministerial Decree takes effect from the date of stipulation, namely March 12, 2021.

PTFI is targeting copper concentrate production of around 1.4 billion pounds in 2021, up 73% compared to the production achievement in 2020 which was recorded at 809 million pounds.

Meanwhile, gold production in 2021 is targeted to increase 65% to 1.4 million ounces from 848 thousand ounces in 2020.

“PTFI estimates production during 2021 to be around 1.4 billion pounds of copper and 1.4 million ounces, almost double the production in 2020,” wrote FCX in its official statement at the end of January 2021.

The increase in production is due to the increasing capacity of theunderground mining(underground mining) Grasberg Block Cave and the Deep Mill Level Zone (DMLZ) block which are currently being developed.

Director General of Minerals and Coal at the Ministry of Energy and Mineral Resources Ridwan Djamaluddin said at a press conference on Friday (15/01/2021) that currently, Freeport’s initial preparations are the feasibility study document, data preparation for the revision of Environmental Management Efforts (UKL) and Efforts Environmental Monitoring (UPL), and land payments for five years to landowners.

Meanwhile, preparations are being made in the form of detailed geotechnical investigations of thePrecious Metal Refinery(PMR) and the copper refining facility area.Then, the installation ofsettlement plate monitoring isbeing carried out.Meanwhile,according to him, theground improvementhas reached 100%, andthe Smelter Front End Engineering Design(FEED) and PMR have reached 100%.

As for the PMR project, he said that the progress had reached 9.79% from the target of 14.29% at a cost of US $ 19.8 million.

Initial preparations have been made such as afeasibility study, both an economic study of around 1.2 million tons per year (MTPA) for Mitsubishi Motors Corporation (MMC) technology, while based on an economic optimization study of 0.8 MTPA for MMC and 1.6 MTPA for OUTOTEC technology.Then, a land lease agreement has been made.

Currently, the preparation of detailed geotechnical investigations is being carried out for the PMR andbasic engineering areas.

As is known, Freeport plans to build a new smelter in the JIIPE integrated industrial area, Gresik, East Java with a processing capacity of 2 million tons of copper concentrate per year.Previously, Freeport said that the smelter project would experience a delay of about one year to around 2024 because it was hampered at the beginning of the Covid-19 pandemic in 2020.