Freeport, Indonesia Inching Closer to Resuming Copper Exports

Arizona-based Freeport McMoRan is inching closer to resuming copper exports in Indonesia after agreeing on the basic framework for contract renegotiations. The mining company is working with the Indonesian government to resolve a dispute over a mineral export tax before a new administration takes over in October.

Freeport isn’t the only one fighting Indonesia’s increased export tax. In January Newmont Mining suspended copper concentrate shipments when the government first introduced the new mining rules, declaring the rule violates its mining contracts. The two companies account for 97 percent of Indonesia’s copper exports.

The CEOs of both companies met with chief economic minister Chairul Tanjung in Jakarta last week in an effort to resolve the five-month dispute.

"There was a lot of progress and we have moved forward in the renegotiation process, but there are still some processes left," Rozik Soetjipto, Freeport Indonesia CEO, said on Tuesday.

The export tax is part of a government drive to force miners to build smelters and processing plants in Indonesia.

Freeport’s contract with Indonesia can only be renewed in 2019, but the company hopes to resolve the issue by creating a Memorandum of Understanding (MoU).

"In the meeting with Chairul Tanjung, we agreed to the principal points (of the MoU)," Soetjipto said. "The MoU will contain details of the basic points that will become the agreement for (the new contract)."

Freeport McMoRan operates the Grasberg mine in Indonesia, the world’s largest gold mine, and second-largest copper mine. Newmont’s main asset in Indonesia belongs to the Batu Hijau copper and gold mine on the island of Sumbawa Barat.