JAKARTA, July 24 Indonesia's top two copper
miners signalled they are nearing a breakthrough to allow a
restart of concentrate exports, which have been halted for more
than six months due to a dispute with the Southeast Asian
country over new mining rules.
The comments come as Indonesian president-elect Joko Widodo
prepares to assume power in October, and will take pressure off
the new government to resolve the dispute, which has halted
about $200 million a month in copper exports.
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.
In a further 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
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 an earnings call with analysts and
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.
CABINET TO MEET
An Indonesian cabinet meeting with outgoing President Susilo
Bambang Yudhoyono was due to discuss the issue later on
News of a potential breakthrough caused little immediate
market reaction. Copper on the London Metal Exchange (LME)
was trading flat at $7,043.75 a tonne in early Asian
A North America-based concentrates trader said any
resumption in exports from Indonesia would not be enough to
dramatically increase supply, but would renew expectations of an
oversupply in the market.
"A lot of pepole expected the market to be oversupplied," he
said, adding that recent delays to mine output expansions had
led to tighter conditions.
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 president-elect Widodo said on Tuesday he
planned to sit down with Freeport and other miners to resolve a
minerals row, which has halted $500 million of exports a month
in Southeast Asia's biggest economy.
(Reporting by Allison Martell in Toronto and Nicole Mordant in
Vancouver; Editing by Amran Abocar, Richard Chang and Richard