Freeport can seek ex­ten­sion for per­mit talks

The Jakarta Post - - BUSINESS - Reuters

In­done­sia’s min­ing min­is­ter said on Thurs­day that Freeport McMoRan Inc could re­quest an ex­ten­sion of six months to rene­go­ti­ate rights to Gras­berg, the world’s sec­ond-big­gest cop­per mine, which is due to end next month.

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.

Freeport shares were up 3.4 per­cent to US$14.48 on Thurs­day, lifted by In­done­sia’s “more con­cil­ia­tory tone,” said Clark­sons Pla­tou global min­ing an­a­lyst Jeremy Suss­man.

A new tax regime for Freeport, the world’s big­gest pub­licly traded cop­per miner, is still be­ing fi­nalised by the fi­nance min­istry, while di­vest­ment terms are be­ing over­seen by the sta­te­owned En­ter­prise Min­istry, En­ergy and Min­eral Re­sources Min­is­ter Ig­na­sius Jo­nan said on Thurs­day.

“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.

Phoenix, Ari­zona-based Freeport did not im­me­di­ately re­spond when asked if it had re­quested an ex­ten­sion.

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 mil­lion tonnes 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 longert­erm agree­ment from be­ing fi­nalised.

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.

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