Freeport 'on path' to new Indonesia mine deal this year

TORONTO • Freeport-McMoRan, the world's largest publicly traded copper miner, is "on a path" to get a new mining deal with Indonesia this year for its giant Grasberg mine, chief financial officer Kathleen Quirk said on Thursday.

The Arizona-based firm resumed copper concentrate exports from Grasberg, the world's second-biggest copper mine, in April after a 15-week outage related to a government dispute over mining rights.

Freeport had planned to ramp up production, which was cut by around two-thirds during the outage. Its shares gained 2.9 per cent to US$12.06 on Thursday.

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

Freeport, whose current contract runs until 2021 with two 10-year extensions, will only agree to a licence accompanied by an investment stability agreement that replicates current legal and fiscal certainty, said Ms Quirk.

"We think we're on a path to be able to get that resolved during this year and that's our top priority," Ms Quirk said via webcast from a Deutsche Bank conference.

Without the agreement, Freeport is unlikely to continue investing in the country, she said, noting the company has already spent US$3 billion (S$4.15 billion) on a project to transition Grasberg to underground from open pit mining.

Production from the project, about half complete, is targeted for 2018 or 2019, she said.

The Indonesian government will meet Freeport next Wednesday for further talks and negotiations could be concluded by October, said Mr Teguh Pamuji, secretary-general of Indonesia's energy and mining ministry yesterday.

"The important thing is the substance, which will cover regulations and documents that will make them comfortable and give security for them to operate in Indonesia," he said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 10, 2017, with the headline 'Freeport 'on path' to new Indonesia mine deal this year'. Print Edition | Subscribe