Freeport-McMoRan Inc is in early talks with the government of Indonesia to extend its access to the country’s giant Grasberg copper mine beyond 2041, its chief executive said on Wednesday, in a bid to ensure the company remains a dominant global producer of the metal needed for the energy transition.
The world’s largest publicly traded copper miner has been operating in Indonesia for 50 years and also is a major producer in South America and the United States. In 2018 Freeport handed 51% of Grasberg to state-owned miner PT Inalum, ending years of fractious negotiations as Jakarta pushed for greater control over its mineral wealth, but remained the mine’s operator.
“We are working with the Indonesian government about potentially extending our rights to operate Grasberg beyond 2041,” Chief Executive Richard Adkerson told Reuters on the sidelines of the LME Week conference in London.
“These are early stage discussions, but we have a long term view,” he added.
Freeport, which pledged a $14 billion investment in the mine in 2018, is in the process of building a copper smelter in the country and is expanding the mine in what is becoming the world’s largest underground mining complex.
Despite copper prices falling 20% this year so far, demand for the metal is expected to be strong in the long term due to the green energy transition. Freeport last week posted a sharp drop in quarterly profit that nevertheless beat Wall Street’s weak expectations as copper demand stayed strong.
[Click here for an interactive chart of copper prices]
“Demand has continued, but prices have declined to anticipate that it will fall off,” Adkerson said.
Uncertainty about the global economy, driven in part by the Russia-Ukraine war and an energy crisis in Europe drove Freeport to drop capital expenditure by well over 10% for the year.
As part of its effort to mitigate the financial impact of declining copper prices, Phoenix-based Freeport is looking at what projects it should prioritize, President Kathleen Quirk said in the interview. “We are not canceling things, but the time might shift,” she said.
Adkerson and Quirk reiterated long-standing comments that Freeport does not need to buy a rival to grow, pointing to expansion plans in the United States and Grasberg.
(By Clara Denina; Editing by Ernest Scheyder)