Indonesia has dropped its demand that Freeport-McMoran build a 1.5 billion US dollar copper smelter in Papua province, saying a regionally owned enterprise would take on the project instead.
The ministry in December said Freeport, which runs the world s fifth-largest copper mine in Indonesia, should agree to build the Papua smelter in five years if it wanted a mining contract extension beyond 2021.
The latest decision could ease pressure on Freeport, which has already agreed to a 2.3 billion dollar expansion by 2017 of its copper smelting facility in East Java.
The government has been pushing the company to comply with rules that force miners to process and refine minerals domestically.
Reuters quotes the Energy and Mineral Resources Minister Sudirman Said saying if Freeport is burdened in two locations it would be uneconomical.