[REPORT] Freeport-McMoRan and Indonesia Reach Agreement on MoU Contract

US miner Freeport-McMoRan Copper & Gold Inc. has agreed on a Memorandum of Understanding (MoU) with the Indonesian government over its contract renegotiations, a major step in resuming copper exports from the country.

The dispute between Freeport and Indonesia began when the country introduced a new export tax on Jan.12. The new tax is part of the government’s strategy to force miners to build smelters and processing plants in Indonesia.

"We received the report from the negotiating team who conveyed good news that Freeport have agreed," said chief economic minister Chairul Tanjung.

The draft MoU still needs to be approved by both the cabinent and outgoing President Susilo Bambang Yudhoyono.

"We are happy and expect it will be finalized with an MoU signing,” Tanjung said.

Freeport, which owns the Grasberg complex - the largest gold and copper mine in the world, has been seeking to secure a contract extension with Indonesia for the site beyond 2021.

Government officials for Indonesia have previously stated Freeport can only renew their 2021 deal in 2019 at the earliest, but it seems likely that the miner will be offered a different type of contract when its current deal ends.

Freeport isn’t the only one battling Indonesia over its new mining rule. The country’s top copper producer, Newmont Mining, has also been working on a resolution to the escalating export tax. The company claims the new law conflicts with the mining contract it originally signed.

Both companies have halted copper concentrate exports since January when the government introduced the surprise tax.

Freeport and Newmont Mining, which account for 97 percent of Indonesia’s copper output, have argued in the past they should be exempt from the tax.