Freeport-McMoRan can seek an extension for Grasberg Mine talks

September 29, 2017

Freeport-McMoRan could request a six-month extension to renegotiate rights to Grasberg copper mine with the Indonesian government, according to the country’s mining minister.

In August, Indonesia reported that it has established a framework agreement for a new permit in which Freeport-McMoRan would divest a 51 percent stake in the Grasberg Mine, the second largest copper mine in the world, while retaining operational control until 2041.

Freeport and the government announced a framework agreement for a new permit late last month, under which the company agreed to divest a 51 percent stake in Grasberg, among other terms, and retain operational control until 2041.

A new tax regime for Freeport, the world’s biggest publicly traded copper miner, is still being finalized by the finance ministry, while divestment terms are being overseen by the state-owned Enterprise Ministry, Energy and Mineral Resources Minister Ignasius Jonan told Reuters.

“The question is, what happens if they aren’t completed?” Jonan asked, referring to the October deadline. “We just need to wait for Freeport to propose an extension to the negotiation period,” he added.

“God willing they will be completed (on time),” Jonan said, adding that negotiations should be completed this year.

Jakarta halted Freeport’s copper concentrate exports in January under new rules requiring miners to adopt a special permit, pay new taxes and royalties, divest a 51 percent stake in their operations and relinquish arbitration rights.

In April, the government awarded Freeport a permit to export 1.1 Mt (1.3 million st) of copper concentrate until February next year, but said shipments could be stopped again in October if negotiations over a new permit were not resolved by then.

Negotiations over contentious issues including divestment, economic and legal protection and domestic smelting investment have prevented a longer-term agreement from being finalized.

Securing a final agreement on the permit still could take months of talks over the valuation of Freeport’s stake, which will partly be determined by agreeing on the trajectory of the mine’s future profits and its commercial reserves, a former mining ministry official said earlier this month.



Related article search: