Exports from world’s second-largest copper mine to drop by 85%

Concentrate exports from Indonesia’s Grasberg mine, the world’s second-largest copper mine, will drop about 85% this year because of a lag in output while operations shift from open pit to underground mining, a government official told Reuters said on Wednesday.

It is believed shipments this year are expected to fall to 200,000 tonnes from an estimated 1.2 million tonnes last year.

US copper producer Freeport McMoRan, operator of Grasberg, had warned the switch from the depleting open pit mine to an underground operation would hit output this year before ramping up production to normal levels — estimated in 160,000 tonnes per day of ore — by 2022.

Freeport yielded majority ownership of the Grasberg mine to state-owned PT Indonesia Asahan Aluminium (Inalum) last month in a $3.9 billion deal that also saw Rio Tinto leave the venture. Inalum now owns 51.2% of PT Freeport Indonesia, and Freeport holds the remaining stake.

Freeport McMoRan and Rio Tinto signed an agreement that give Indonesia a majority stake in their Grasberg copper mine, the world’s second-largest copper mine.  The “definitive” and “binding” agreements ended a long-drawn-out, three-way dispute over the mine, centred on bringing Indonesian ownership up to 51%, a main requisite set by the government to allow Freeport-McMoRan, operator of Grasberg, to keep doing so.

The Indonesian government has also promised to issue a special mining license extension to Freeport allowing ore extraction until 2041 after completion of this deal.

Grasberg, which is also the world’s fourth largest gold operation, is expected to 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.

Grasberg’s Deep Mill Level Zone block cave mine, presently under construction, is projected to contribute an additional 80,000 tonnes per day of ore once at full capacity.

Currently, Grasberg’s reserves are estimated to be worth about $14 billion.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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