President Director of PT Indonesia Asahan Alumunium (Inalum), Budi Gunadi Sadikin said Freeport Indonesia’s production was stable again in 2023. The gold mining company is expected to print a net profit of US $ 2 billion per year after 2023.
According to Budi, Inalum will get US $ 1 billion per year after the Freeport underground mine operates. Budi is also optimistic that Inalum will still be able to pay off debts even though Freeport’s income has now declined due to the cessation of the Grasberg open pit. “So if we are in debt of US $ 4 billion, it can be settled in four years, the interest is also low at only 6 percent,” he said at the KAHMI Center, Jakarta, Wednesday, January 9, 2019.
After the debt was paid off, said Budi, the US $ 1 billion per year could even be Inalum’s profit. “This will produce a maximum of around 2023, and will stabilize later,” Budi said. “Don’t be scolded if production falls in 2019 and 2020, not because the mine runs out.”
Budi continued in this stable condition, Freeport would have revenues of US $ 7 billion or around Rp. 98 trillion per year assuming an exchange rate of Rp. 14 thousand per US dollar. Furthermore, the company’s net income in a stable condition is predicted to be US $ 4 billion or Rp. 56 trillion.
On a separate occasion, the Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Bambang Gatot Ariyono said Freeport’s EBITDA is estimated to drop from US $ 4 billion to around US $ 1 billion this year. However, he asserted Freeport’s income fell not because of the case of depletion of reserves and the level of mining goods there. The decline was due to the production process in the Grasberg underground mine still not yet begun.
After the underground mine operates, Bambang is optimistic that PT Freeport Indonesia’s revenues will start to rise again. “Since 2020 and 2021 will rise again until 2025, later 2025 will begin to stabilize,” said Bambang.
Late last year, Inalum redeemed 51.2 percent of the shares of Freeport Indonesia for US $ 3.85 billion or Rp. 55.8 trillion (with an exchange rate of Rp. 14,500). The corporate action after Inalum has paid off the Freeport share divestment transaction, Friday, December 21, 2018.
To control Freeport shares Inalum issues foreign currency bonds worth US $ 4 billion or Rp. 58 trillion. In addition to buying shares, the remaining proceeds of the bonds are used for refinancing. Inalum appointed BNP Paribas, Citigroup and MUFG to be the coordinator of the bond issuance underwriter or underwriter. While CIMB, Maybank, SMBC Nikko, and Standard Chatered Bank were appointed as underwriter partners.
As a result of the decline in revenue, Budi said Freeport Indonesia would not distribute dividends for two years until 2020. “So we will not share dividends for two years, zero to 2020,” Budi said.
To operate the Grasberg underground mine, said Budi, Freeport needs an investment of US $ 1.1 – 1.4 billion per year. “It is outside the smelter,” he said at the KAHMI Center, Jakarta, Wednesday, January 9, 2019.
The Grasberg underground mine, said Budi, has yet to
produce. Budi acknowledged that the investment in mining had been late before the Freeport divestment process finished.