Indonesia threatens action against US miner Freeport

Indonesia threatens action against US miner Freeport
In this file photograph taken on August 16, 2013, Freeport security personnel look on at the Freeport McMoRan's Grasberg mining complex, one of the world's biggest gold and copper mines located in Indonesia's remote eastern Papua province.

JAKARTA - Indonesia on Tuesday threatened to suspend Freeport-McMoRan's export licence, with the energy minister accusing the US mining giant of failing to uphold its end of a bargain with the government.

In return for promising to build a smelter in Indonesia to support the domestic economy, Jakarta in July exempted Freeport from paying a new tax introduced on the export of some unprocessed minerals.

But just days before that agreement is due to expire, Energy Minister Sudirman Said said progress on the smelter - a "big item" in the negotiations - had been slow and unsatisfactory. "I am not pleased. I am disappointed as there is no show of seriousness," he told reporters in Jakarta. He said if there was no progress by Sunday, the export permit would be suspended.

Indonesia introduced a raft of policies in early 2014 to address political concerns that foreign firms were allowed easy access to lucrative industries in Southeast Asia's top economy.

The most controversial of these measures was a ban on the export of some unprocessed minerals and higher taxes on other resources shipped from the country.

Copper concentrates - one of Freeport's major exports - was exempted from the ban, but the mining giant refused to pay the hiked tax on shipments. The agreement struck in July brokered a way forward for the two sides, with Freeport allowed to resume concentrate exports after a six-month hiatus in return for committing cash to build a domestic smelter. The memorandum of understanding for the deal expires on Saturday.

Said urged Freeport to find a way forward, saying he wanted the company to operate in Indonesia because it was important for the economy. But he reminded Freeport - whose giant cooper and gold mine Grasberg in Indonesia's Papua province is one of the world's largest - that it still earned the lion's share of profits when it came to its business.

"Freeport has operated for 40 years so it's time that there is a bigger portion for Indonesia," he said. "It is only fair." Freeport could not immediately be contacted for comment.

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