Freeport-McMoRan announced that it has halted production of copper concentrate at its Grasberg Mine in Indonesia because of the rules restricting copper concentrate exports that went into effect on Jan. 12.
The Indonesian government introduced the rules in a bid to boost its domestic smelting industry. Without the ability to move its copper concentrate, Freeport-McMoRan has filled its storage capacity and has been forced to slash its output from the mine. The company has also sent workers home, Reuters reported.
Freeport previously said the suspension of concentrate exports would require the Grasberg mine to slash output by around 70 million pounds of copper per month.
The halt comes at the same time as a stoppage at the world's biggest copper mine in Chile, BHP’s Escondida Mine, fueling supply worries and helping support prices for the metal near 20-month highs.
“The processing plant has not been producing concentrate since last Friday (Feb. 10),”" Freeport Indonesia spokesman Riza Pratama told Reuters on Feb. 14.
The company previously said it would need to cut production to about 40 percent of capacity if it did not get an export permit by mid-February, due to limited storage.
But a strike at Freeport's sole domestic off-taker of copper concentrate, PT Smelting, expected to last at least until March, has limited Freeport's output options, and Grasberg's storage sites are now full.
Under new regulations announced in mid-January, Freeport and some other miners could be allowed to keep exporting semi-processed ores and concentrates if they meet conditions including shifting from their current ‘contracts of work’ to so-called ‘special mining permits,’ a move that could leave them liable to paying more in taxes.
Although the government said on it had issued the new mining permit, Freeport said no agreement had been reached on the terms that were "necessary and critical" for its long-term investment plans, and that an export ban remained in place.
Freeport was still seeking "investment stability guarantees from the finance ministry", a mining ministry official told Reuters on Tuesday, declining to be identified as he was not authorized to speak with media.
In 2014, Freeport's Indonesian copper concentrate exports were suspended for six months while it negotiated new mining rules.