Freeport McMoRan Inc. will seek Indonesia’s approval to keep exporting mined copper beyond a May deadline to avoid building up stockpiles of concentrates as it ramps up output at a smelter it’s building at Jakarta’s request.

The US miner aims to finish building the new plant in East Java in the second quarter, in what will be a milestone in the Indonesian government’s long-running campaign to build downstream processing capacity in its metals and mining industry. 

Freeport has secured a temporary exemption from a nationwide ban on exports of mined copper while it finishes the smelter. However, it faces a cliff-edge scenario in May, when the permit will expire, and the plant is likely to be in the final stages of construction or the early stages of ramping up. 

Without a further extension, Freeport could end up accumulating a large backlog of mined raw materials, known as concentrates. 

“We are going to have to work with the government to allow us to continue to export during the ramp-up,” Kathleen Quirk, president of Freeport, said in an interview in London. “I think from a public perception standpoint, that milestone of getting construction done will be a big deal and will allow us to get some more flexibility with the exports.”

Freeport started building the plant in 2021, after spending more than a decade disputing the government’s claim that it was losing out by selling copper concentrates to smelters overseas. Similar efforts in the nickel industry have sparked billions of dollars worth of investment that have transformed the country into a powerhouse producer, but Chairman and Chief Executive Officer Richard Adkerson reiterated Freeport’s long-running argument that in copper there’s less value to be captured in the final stage of turning semi-processed ores into finished metal.

“Economically, you cannot build a case for building a new copper smelter,” he said, noting that there is an excess of smelting capacity in China and the rest of the world. “But the government was so committed to this downstreaming policy, which, candidly, makes more sense for other minerals than for copper.”

The construction of the smelter will have a major impact in the global market for copper concentrates. Freeport has historically been such a large exporter of concentrates that the processing fees it negotiates with smelters tend to set the benchmark for the rest of the industry. 

Speaking as annual supply negotiations kicked into gear in London, Adkerson declined to comment on whether its deals will continue to serve that role once the smelter is built and the permit expires.

“It’s a valid question,” he said. “We’re just starting negotiations right now, so it’s probably not the right time to comment on it.”