(Rewrites throughout to add details on royalties, export tax)
By Fergus Jensen
JAKARTA, July 25 Freeport-McMoRan Inc
clinched a deal with the Indonesian government on Friday
allowing the miner to resume copper concentrate exports from the
country, effectively ending a six-month tax dispute and paving
the way for more miners to follow suit.
Freeport, which is expected to export 756,000 tonnes of
copper concentrate in the second half of this year, received its
permit from the trade ministry on Friday after signing a
memorandum of understanding (MoU) with the government, Freeport
Indonesia CEO Rozik Soetjipto said.
With its export permit in the bag, Indonesia's top copper
miner said it will resume full operations immediately, with
concentrate shipments expected to resume next month from
Grasberg, one of the world's largest copper mines.
"In terms of permitting, everything is OK," Soetjipto said.
"We still have to load the ship, and this may take a few days."
Freeport shares were up 1.79 percent on the New York Stock
Exchange on Friday.
The company will now be subject to higher royalties, which
will increase to 4 percent for copper and 3.75 percent for gold,
up from 3.5 percent and 1 percent respectively, and the
U.S.-based miner will also have to pay export duties on
shipments until it builds a smelter in the Southeast Asian
In January, the government introduced a controversial
escalating tax on metal concentrates that climbed to 60 percent
by 2017. Under a revision of the tax, Freeport will pay a 7.5
percent duty on its copper concentrate exports, but that rate
falls as it spends on its smelter, hitting zero once investment
in the project exceeds 30 percent of total cost.
The deal is expected to take some of the pressure off
President-elect Joko Widodo, who has said resolving the dispute,
which has sapped government mining revenues, would be one of his
top priorities when he takes power in October.
The export tax was meant to force miners to develop local
mineral processing facilities, allowing the government to derive
bigger returns from Indonesia's mineral resources.
But rather than pay it, most miners stopped exporting from
Southeast Asia's biggest economy, resulting in $1.3 billion in
lost copper concentrate shipments. It also led Indonesia's
second-biggest copper producer, Newmont Mining Corp, to file for
international arbitration earlier this month over the new export
rules it said were in breach of its contract.
A spokesman for Newmont Mining Corp, which owns the
Batu Hijau mine on the Indonesian island of Sumbawa, said it is
in talks with the government on a separate MoU that would allow
it to resume operations at its massive copper mine.
"We are encouraged by the news about Freeport, which we hope
will pave the way for construction of a copper smelter and lead
to an economically sustainable resolution of the export ban,"
Newmont spokesman Omar Jabara said.
Freeport currently smelts some 30 to 40 percent of its
output from its Grasberg mine at a copper smelter in Gresik,
East Java. The company has previously said it plans to work with
Indonesia's state-owned miner Aneka Tambang (Antam) to
build the country's second copper smelter.
It is not clear whether that project will be ready before
Indonesia's ban on concentrate exports begins in less than three
(Additional reporting by Adriana Nina Kusuma and Yayat
Supriatna in Jakarta and Julie Gordon in Vancouver; Writing by
Randy Fabi; Editing by William Hardy and Grant McCool)