Freeport to Re­tain Min­ing Rights at Gras­berg – For Now

Indonesia Expat - - Business Profile -

US min­ing gi­ant Freeport-McMo­ran Inc will hold on to con­trol of op­er­a­tions of the Gras­berg mine in Pa­pua, it con­firmed af­ter agree­ing to gov­ern­ment de­mands to de­crease its stake in lo­cal unit Freeport In­done­sia to 49 per­cent.

The com­ments come af­ter long-run­ning ne­go­ti­a­tions with the gov­ern­ment to re­solve a per­mit dis­pute. The move will see Freeport In­done­sia per­mit­ted to re­sume op­er­a­tions un­til 2041.

Freeport Chief Ex­ec­u­tive Richard Ad­ker­son, who has been in In­done­sia for high level meet­ings with min­is­ters, said the com­pany will fo­cus on un­der­ground min­ing in the com­ing years over fears the Gras­berg mine re­serves are be­ing de­pleted. Tempo re­ported that while out­put once hit 1 mil­lion tons of ore per day, the mine cur­rently pro­duces around 100,000 tons of ore daily.

Es­ti­mates put the un­der­ground min­ing project cost as up to US$20 bil­lion, with around US$750 mil­lion in in­vest­ment ex­pected over the next year.

The Min­er­als Min­istry Di­rec­tor Gen­eral of Min­eral and Coal Bam­bang Ga­tot Ariy­ono told Tempo Freeport will re­tain con­trol of the mine, adding that the gov­ern­ment must un­der­stand the man­age­ment of the mine be­fore tak­ing con­trol.

De­tails on the di­vest­ment plan are still be­ing hashed out by the two par­ties and a dead­line has not yet been an­nounced.

“The man­date of the pres­i­dent, which has been agreed to by Freeport, is that the di­vest­ment should reach 51 per­cent,” En­ergy and Min­eral Re­sources Min­is­ter Ig­na­sius Jo­nan said last week, as re­ported by newswire Reuters.

“All that is left is to dis­cuss the tim­ing. The price will be ne­go­ti­ated later,” Ad­ker­son added at the time.

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