4-8-2023 (JAKARTA) Mining giant Freeport has secured a license allowing it to ship copper concentrate from its Indonesian operation until May 2024, but the company may challenge new government regulations on export duties.
Freeport Indonesia, exempted from the country’s ban on raw mineral exports, was granted the export license on July 24 for 1.7 million metric tons of copper concentrate, as disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) on Thursday.
In an effort to attract investment into its metals processing industry and boost revenue, Indonesia implemented a ban on outbound shipments of raw minerals in June. However, the government made an exception for certain companies, including Freeport, permitting them to continue exporting until mid-2024 to allow sufficient time for the construction of smelters.
Despite the export license, the government imposed new duties on products shipped by these companies, which Freeport Indonesia may challenge, according to the filing.
Under Freeport Indonesia’s 2018 special mining license, no duties are required once its smelter reaches at least 50 per cent completion. The filing noted that in March 2023, the Indonesian government verified that construction progress on the Manyar smelter exceeded 50 per cent, resulting in the elimination of Freeport Indonesia’s export duties effective March 29, 2023.
However, a finance ministry regulation issued last month stated that exports of copper concentrate would continue to incur duties ranging from 5 per cent to 10 per cent, even if companies’ smelter construction was beyond 50 per cent.
Freeport Indonesia is currently engaging in discussions with the Indonesian government to assess the applicability of the revised regulation and intends to contest and seek recovery of any assessments made.
