JAKARTA: Indonesia will allow US mining giant Freeport-McMoRan to continue exporting minerals for at least another six months after it agreed to build a smelter costing $2.3 billion, government officials said Sunday.
On Tuesday officials had threatened to suspend Freeport's export licence, with the energy minister accusing it of failing to uphold its end of a bargain with the government.
"The export permit continues. It is for six month and then it will be evaluated," said R. Sukhyar, the director-general for coal and mineral resources.
The evaluation will take into account significant progress in the smelter development, which is due to be completed in 2017, he added. Indonesia is flexing its muscles as it seek bigger profits from its mineral wealth from miners such as Freeport, whose Grasberg copper and gold mine in Papua province is one of the world's largest.
Freeport and the Indonesian government will also hold talks over the next six months to discuss an extension of its contract to run Grasberg after the existing agreement expires in 2021.
The US company, which has operated in Indonesia for more than 40 years, proposed a 20-year extension, and pledged that it would invest another $15 billion to build underground mines beneath the depleted Grasberg open-pit mine.
"We have expectations going forward that we are going to continue to mine for the life of the mine. The partnership between the government and Freeport, this partnership is forever," the firm's chairman James R. Moffett told a press conference in Jakarta. The government of new President Joko Widodo, however, said it wanted more if it were to allow Freeport to stay longer.
"In the negotiation process to extend Freeport's contract, the government wants Freeport's presence to be able to make a more significant contribution to development in Papua," Sudirman Said, the energy and mineral resources minister, told the press conference.
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