(Adds Newmont comment, background)
July 23 Freeport-McMoRan Inc said on
Wednesday it expects to "imminently" sign an agreement with
Indonesia that would enable it to immediately resume copper
concentrate exports which have been halted for more than six
In a sign that the deadlock could be nearing an end, Newmont
Mining Corp also said it was negotiating a memorandum of
understanding that could restart stalled shipments.
Arizona-based Freeport said on July 8 it had agreed on a
draft memorandum of understanding with the Indonesian government
but had not signed it. At the time, it gave no time frame on
when it would resume exports. Indonesia introduced a mineral ore
export ban and a steep export tax in January.
"It is a compromise to create a bridge for us so that we can
return to normal operations," Freeport Chief Executive Richard
Adkerson said of the MoU on a call with analysts and investors
after the miner reported second-quarter results that were little
changed from a year-ago.
Under the agreement, Freeport would pay a "significantly
reduced" export duty in 2014, 2015 and 2016 but higher royalties
on copper and gold sales. It would also pay a $115 million
"assurance bond" against development of a smelter, Adkerson
Freeport, which owns and operates the massive Grasberg mine,
wants financial incentives from the government to build a new
smelter. Indonesia imposed the new rules partly to spur
construction of smelters in the country, but miners have said
building new capacity does not make economic sense.
Adkerson said the negotiations also involve agreeing on
terms to extend Freeport's operations beyond 2021, when its
current contract with the government expires.
NEWMONT BACK IN TALKS
The two U.S. mining giants account for 97 percent of
Indonesia's copper production. While Freeport had engaged in
behind-the-scenes talks, Newmont suspended operation at its Batu
Hijau mine and filed for international arbitration, drawing a
rebuke from the Indonesian government.
"We hope to reach an agreement with the government of
Indonesia on an MoU or memorandum of understanding, which we
would expect would lead to issuance of an export permit,"
Newmont spokesman Omar Jabara said on Wednesday.
He did not give details on terms or when exports could
resume. Officials from Newmont's Indonesian unit have been in
ongoing meetings with the government, he added.
Indonesia's new president said on Tuesday he planned to sit
down with Freeport and other miners to resolve the row, which
has halted $500 million of metal exports a month in Southeast
Asia's biggest economy.
Freeport has cut production in Indonesia, which weighed on
results in the quarter ended June 30, but company-wide, copper,
gold and molybdenum production rose.
The year-earlier figures included only one month of results
from Freeport's recently acquired oil and gas businesses, so
that segment's revenue jumped to $1.24 billion from $372
Net income was $482 million, or 46 cents a share, compared
with $482 million, or 49 cents, a year earlier.
Analysts, on average, had been expecting earnings of 51
cents a share, according to Thomson Reuters I/B/E/S.
Freeport said it would continue to look for ways to reduce
its debt, which could include asset sales or reducing or
deferring capital spending. It ended the quarter with $20.3
billion of debt.
(Reporting by Allison Martell in Toronto and Nicole Mordant in
Vancouver; Editing by Bernadette Baum, Amran Abocar and Richard