* Contract talks ongoing for Freeport's Grasberg copper and
* Current Grasberg contract expires 2021, open-pit mining
due to end after 2016
* Freeport wants renewal before making investments of about
By Yayat Supriatna
JAKARTA, July 26 Freeport McMoRan Copper & Gold
Inc's Indonesian subsidiary will offer a 5 percent stake
to the public and is in talks with three local smelters on
copper concentrate supply deals, company and government
officials said on Friday.
The moves could help pave the way for a deal in long-running
contract talks with the Indonesian government, which is pushing
miners, especially foreign-owned operations like Freeport's
unit, to add more value within the country.
Freeport's current contract to operate Grasberg in Papua
province, the world's second biggest copper mine, expires in
2021. The Arizon-based company wants a new contract completed
before it makes investments of around $15 billion to extend the
life of the complex after open-pit mining ends.
"The renegotiation talks are still ongoing," Industry
Minister Mohamad S. Hidayat told reporters after talks with
Rozik Soetjipto, CEO at Freeport Indonesia.
Contract renegotiations have rumbled on for more than a
year, with the government seeking bigger royalty payments,
commitments on domestic processing and greater divestment by
The government has asked all miners to submit plans to build
refineries or smelters ahead of a January 2014 ban on raw
mineral exports, while foreign miners must sell 51 percent of
their assets after 10 years of production.
"Freeport Indonesia promised to comply with the Indonesian
mineral and coal law (for 2014) but has no plans to build
smelters," Hidayat added. "Freeport Indonesia is preparing MoUs
with three Indonesian smelter companies."
The three local copper smelter firms in talks with Freeport
are PT Nusantara Smelting, PT Indosmelt and PT Indovassi, said
Freeport Indonesia CEO Soetjipto. Earlier this year, PT
Indosmelt said it was in talks with Freeport over a supply deal.
Freeport is the majority shareholder in the Indonesian unit,
with the Indonesian government the only other shareholder with a
9.36 percent stake.
Freeport said a year ago it had offered a further 9.36
percent stake in its local subsidiary to Indonesian buyers, and
it has previously said it was considering a share offer in
Jakarta without indicating a possible size.
Freeport Indonesia only resumed full operations two weeks
ago after suspending operations when 28 people died following a
training tunnel cave-in in May.
The open-pit mine normally produces between 140,000 tonnes
and 150,000 tonnes of ore per day, while output from the
underground operations is 80,000 tonnes.
Freeport declared force majeure - an inability to meet
contractual obligations due to circumstances beyond its control
- on copper shipments after the accident.
The force majeure had not yet been lifted, a Freeport
Indonesia spokeswoman said in an email this week, while
underground mining and shipments were not yet running at full
The Grasberg mine ships around 35 percent of its production
for further processing in Indonesia, and the remainder goes to
Japan, Korea, China and Spain, say government officials.
The government hopes to conclude the contract talks by the
end of year. Indonesian's Trade Minister has said May's accident
should not delay a deal being reached.
As well as talks with the government to renegotiate a new
mining contract to replace its current 30-year contract that
expires in 2021, Freeport Indonesia is also in pay talks with