IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Outflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 19 Jan 2017 | Removal date: 24 Apr 2017
Still in force

Export ban

Following a legal dispute between the Indonesian government and the second largest copper producer in the world, PT Freeport Indonesia (hereinafter PTFI), Indonesia has imposed an export ban on the company's copper exports.

The dispute has been going on for years after Indonesia passed a new Investment Law in 2009. The Law created numerous restrictions regarding the export of ores as well as divestment requirements. PTFI, the local subsidiary of the American mining company Freeport-McMoRan, has been unwilling to renegotiate its legal status in the country quoting that the Contract of Work signed with the Indonesian government back in 1991 would remain in place until 2021. The government has pressured the company for years to redefine the contract to an "IUPK" special license.

Freeport's CEO and president released a statement on 17 February 2017 saying "[e]ven though Indonesia’s Mining Law of 2009 states that Contracts of Work remain in force during their terms, the Government is seeking to require Freeport to forfeit the 1991 Contract of Work in return for an uncertain operating license and short-term approval to export. We cannot relinquish the legal rights provided by the Contract which are the basis of long-term stability and protection for our Company and vital to the long-term interests of our employees, communities, and shareholders".

The ban was halted after PTFI received a temporary license on 25 April 2017 until 16 February 2018. However, the dispute remains unsolved and, according to media reports, may end up in international arbitration.

According to media reports in May 2017, the government is holding negotiations with PTFI, which are expected to last until October 2017. Media reports in October 2017 (cf. Sources) seem to confirm the expected settlement date. They reported that a preliminary settlement has been reached and PTFI is going to fulfil the new government regulations. However, disagreement still persists about the details, e.g. the valuation, timeline and method of payment.

PTFI's only Indonesian Grasberg plant accounts for a third of the economic output in the province of Papua.

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

142 Non-ferrous metal ores & concentrates
2603 Copper ores and concentrates.
260300 Copper ores and concentrates.

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