Freeport, Indonesia make headway towards settling copper exports impasse
Talks between Indonesia and US miner Freeport-McMoRan Copper & Gold (NYSE:FCX) to resolve a dispute over a mineral export tax before a new administration takes over in October have given their first fruits, as the parts agreed Tuesday on the basic framework for contract renegotiations.
Today’s agreement is considered a major step forward in the Arizona-based firm quest for resuming copper exports from the country, Reuters reports.
Freeport-McMoRan’s CEO Richard Adkerson arrived in Jakarta again last week, a few days after talks with Indonesia's new chief economics minister failed to make a major breakthrough on an escalating export tax that has halted copper concentrate shipments since January.
Freeport is not alone in the battle against Indonesia’s new mining rules introduced in January. The country’s top copper producer and fellow miner Newmont Mining (NYSE:NEM) is also pushing for a resolution, as it claims the new laws, including an escalating export tax, conflict with initially signed mining contracts.
Both miners are key for Indonesia. Freeport operates Grasberg, the world's largest gold and second-largest copper mine with a history that dates back to the 1930s, in the West Papua province. Newmont main asset is the Batu Hijau copper and gold mine, on the island of Sumbawa Barat.
Together they account for 97% of Indonesia's copper exports.
Earlier this month the company halted all operations and declared force majeure, warning that the results of negotiations with Indonesian authorities would determine the future of about 3,200 of its employees, currently on leave with reduced pay
Freeport had previously warned that the export ban would force it to cut production by 60%, resulting in 15,000 job losses and costing the government an annual $1.6 billion in lost royalties and taxes.