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Freeport ordered to pay 460B rupiah for illegal forest use in Indonesia

Indonesia's Supreme Audit Agency ordered Freeport-McMoRan Inc. to pay 460 billion Indonesian rupiah in royalties for illegally using a protected forest to deposit tailings from the Grasberg copper mine, Reuters reported Dec. 19.

According to a 2017 audit by the agency, Freeport should have been paying about 34 billion rupiah per year in royalties for using 4,536 hectares of the forest since 2008.

The agency said the environment ministry is finalizing Freeport's forestry permit, but the company is still required to pay the outstanding royalties in two years.

Freeport was also flagged for mining underground at Grasberg without a permit, with damage from the mine's tailings amounting to about US$13.3 billion.

The environmental issues have delayed PT Indonesia Asahan Aluminium (Persero)'s US$3.85 billion acquisition of a majority stake in Grasberg.

According to a Dec. 18 Reuters report, the state miner is aiming to close the deal this week and plans to sell a 10% interest in Freeport's PT Freeport Indonesia unit to Papua province and Mimika regency, where Grasberg is located, for US$819 million.

As of Dec. 18, US$1 was equivalent to 14,454 Indonesian rupiah.