ESDM Ministry extends PTFI's copper export permit to June 2025

Energy and Mineral Resources (ESDM) Minister Bahlil Lahadalia revealed that PT Freeport Indonesia (PTFI) has received an extension of its copper concentrate export permit until June 2025. Part of the reasons underlying the decision, which is against the Indoensian government's industrial downstreaming mission, include the condition of PTFI's smelter, which was affected by a fire.

"Yesterday we had a limited meeting as a follow-up to the Limited Coordination Meeting (Rakortas). We have to calculate everything for the good of the country, the good of the company, and the good of the Papuan people. By law, we must admit that the export deadline was Dec. 31, 2024," said Bahlil at the ESDM Ministry Office on Feb. 21, 2025.

Bahlil explained that there was a fire in the sulfuric acid area of PTFI's smelter. The police were requested to investigate to determine whether the incident was caused intentionally or not, and the related insurance company also conducted their own assessment. If proven to be intentional, the export permit would not be extended. However, both the insurance company and the police concluded that the fire was force majeure.

Bahlil said that the PTFI smelter, which has US$billion invested for it, is almost complete. However, the fire that occurred at the smelter's sulfuric acid facility caused the delay for the start of its operations.

"On that basis, the government then decided through a limited meeting that Freeport could extend its exports until the damaged factory was completed. When will it be completed? In June," he revealed.

To bind the commitment, the government has asked PTFI President Director Tony Wenas, to sign a statement on a stamp and have it notarized.

"If it is not completed by June, then sanctions will be given [to PTFI]. [For example,] we will impose the maximum export tax on [PTFI's] exports," said Bahlil.

Although export permits have been granted until June 2025, Bahlil emphasized that smelter operations cannot immediately run at full capacity. Therefore, around 30 to 40 percent of the total concentrate produced will be exported gradually, while 60 to 70 percent will initially be utilized by the smelter.

"Like a new car, it can't go 140 kilometers per hour straight away. So, it has to [start operating] gradually. I assure you, everything will be running optimally by October or September," he explained.

Regarding the permitted export volume, Bahlil said the government will calculate the needs carefully. Based on the data, PTFI's total concentrate production reaches more than 3 million tons per year, with 1.35 million tons allocated for smelters that have expanded and 1.7 million tons for new smelters. He emphasized that the ESDM does not want to make decisions that are detrimental to workers, the Papuan economy, and regional income.

"Freeport is also resourceful. But I will never be fooled by Freeport's seduction. I am consistent," Bahlil said.

He added that the recommendation for an export extension is still in the process of being finalized by the government.

Previously, Freeport asked the government to reopen copper concentrate exports this year. Tony noted that exports can be carried out in the event of force majeure based on the provisions in PTFI's special mining business permit (IUPK). However, ESDM regulations still need to be adjusted to accommodate the situation.

Tony stated that due to the cessation of smelter operations, PT Smelting Gresik was only able to use around 40 percent of the total copper concentrate produced by PTFI in Papua. That condition caused around 1.5 million tons of copper concentrate to become unused.

"From the total export value which could be more than US$5 billion, the country has the potential to lose revenue of US$4 billion or around Rp65 trillion from various sources such as export duties, royalties, dividends, and taxes," Tony claimed

The potential state revenue decline include US$1.7 billion (Rp28 trillion) of dividends, US$1.6 billion (Rp26 trillion) of taxes, US$400 million (about Rp6.5 trillion) of export duties, US$300 million (around Rp4.5 trillion) of royalties.

In addition, the is estimated to decrease regional revenue by up to Rp5.6 trillion in 2025. Central Papua Province is predicted to incur an Rp1.3 trillion decrease, Mimika Regency could see a Rp2.3 trillion drop, while other regencies in Central Papua could  see a Rp2 trillion decline in revenue.

Tony also highlighted that partnership funds for community development originating from 1 percent of Freeport's revenue will also decrease by around Rp1 trillion if the export ban remains in effect.