(Recasts with Newmont CEO also in Jakarta)
By Michael Taylor and Fergus Jensen
JAKARTA, June 12 The chief executives of
Freeport McMoRan Copper & Gold Inc and Newmont Mining
Corp are both in Indonesia's capital, marking what might
be a last-ditch effort to resolve a dispute over a mineral
export tax before a new administration takes over in October.
Richard Adkerson, the CEO of U.S.-based Freeport, was in
Jakarta again less than a week after talks with Indonesia's new
chief economics minister failed to make a major breakthrough on
an escalating export tax that has halted copper concentrate
shipments since January.
"Yes he is," Freeport spokeswoman Daisy Primayant said in a
text message on Thursday, when asked whether Adkerson was back
in Jakarta. She did not elaborate.
Newmont CEO Gary Goldberg, who was not involved in last
week's talks, was in the capital to "demonstrate the company's
seriousness in supporting the government's policy to increase
domestic smelting", spokesman Omar Jabara said in an email.
He said Goldberg hopes to meet with "several government
Indonesia's chief economics minister and billionaire
businessman, Chairul Tanjung, is spearheading a new government
push aimed at brokering a deal with foreign miners to restart
copper concentrate exports that halted five months ago.
Both Freeport and fellow U.S.-based copper and gold miner
Newmont have previously argued they should be exempt from the
tax, which kicks in at 25 percent and rises to 60 percent in the
second half of 2016, before a total concentrate export ban in
2017. They say their current contracts prohibit any extra taxes.
The export tax is part of a government drive to force miners
to build smelters and processing plants in Southeast Asia's
largest economy, but a lack of progress in resolving the
stalemate last week led to Newmont declaring force majeure.
Although government officials have said Freeport has agreed
to pay the tax, with the percentage tied to progress made in
smelter construction, the extension of the Arizona-based miner's
contract beyond 2021 appears to now be a stumbling block.
While Freeport says it needs the certainty of a contract
extension before investing more than $15 billion to turn its
Grasberg complex into an underground mine when open-pit
activities end after 2016, the outgoing government says it
cannot legally do this.
Government officials have previously said Freeport can only
renew their 2021 deal in 2019 at the earliest.
"The government at the moment has no right to extend
Freeport's contract that ends in 2021," Tanjung told reporters
on Thursday. "Freeport has asked for that extension but ... the
current government doesn't have the right."
The government has consulted legal experts to see whether
there is room for manoeuvre on the 2019 contract stipulation,
and has proposed signing a legally binding MoU with Freeport to
bypass the contract extension issue.
Indonesia holds a presidential election on July 9, with a
new administration set to take office in October. Current
President Susilo Bambang Yudhoyono has served the maximum two
(Additional reporting by Wilda Asmarini, Allison Martell in
Toronto and Nicole Mordant in Vancouver; Editing by Jonathan
Thatcher, Ed Davies and Meredith Mazzilli)