Indonesia forecasts drop in Grasberg copper concentrate exports in 2019
JAKARTA – Copper concentrate exports from Indonesia's Grasberg mine, the world's second-largest copper mine, are forecast to plunge this year because of a lag in output as operations move from open pit to underground mining, a government official said on Wednesday.
In 2019, copper concentrate exports are expected to drop to 200 000 tonnes from about 1.2-million tonnes last year, said Yunus Saefulhak, the director of minerals at the Energy and Mineral Resources Ministry.
Grasberg's operator, US miner Freeport McMoRan, has documented the output decline, which is the result of the switch from the depleting open pit mine early this year but before a massive expansion of a coexisting underground mine ramps up to full production.
The output drop will cut Grasberg's revenue over the next few years just as Indonesia's state-owned miner PT Indonesia Asahan Aluminium (PT Inalum) takes over ownership of the US miner's PT Freeport Indonesia unit.
"Concentrate production in 2019 will decline because of the change from open pit to underground (mining)," said Saefulhak.
Grasberg will produce around 1.2-million tonnes of copper concentrate this year, compared to 2.1-million tonnes in 2018, while domestic consumption will grow to 1-million tonnes compared to 800,000 tonnes in 2018, the ministry said.
A spokesman for Inalum said the decline was in line with expectations.
"Production will resume normally after 2022, and Inalum has forecast net profit to average more than $2-billion annually when the transition is slated to be completed after 2022," Inalum spokesman Rendi Witular told Reuters.
Revenues of Freeport Indonesia, in which Inalum holds a majority stake, are expected to drop to $3.1-billion in 2019 from $6.3-billion in 2018, and peak again at $7.5-billion in 2023, according to data provided by Inalum.
A spokesman for Freeport Indonesia could not be reached for comment.
Recently appointed Freeport Indonesia Chief Executive Officer Tony Wenas said last month that Grasberg output would begin to climb again in 2020, although the company said in October output would be "significantly" impacted until 2021.
The production declines coupled with sliding copper prices and Freeport's sale of its Indonesian unit to Inalum have battered the Phoenix, Arizona-based company's share prices, which fell 46 percent in 2018.
Freeport shares closed at $11.20 apiece on Tuesday.
Grasberg produced 270 000 tonnes of copper ore per day in 2018, Saefulhak said.
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