Oil and Gas

Freeport close to resuming Indonesia copper exports -Minister

JAKARTA, March 30 (Reuters) - Freeport McMoRan Inc’s Indonesian unit is close to reaching a deal that will allow the mining giant to temporarily resume copper concentrate exports from its Grasberg mine in Papua, Indonesia’s mining minister said on Thursday.

Indonesia stopped Freeport’s concentrate exports in mid January in an effort to improve revenues from mining resources and create jobs.

But the stoppage resulted in Freeport shelving billions of dollars of planned investments and has threatened to unsettle business sentiment in Southeast Asia’s biggest economy.

The latest change in tone from Jakarta could signal a near end to a more than 10-week stoppage of exports from the world’s second-biggest copper mine.

“Freeport Indonesia has entered the final stage of discussions with the government,” Energy and Mineral Resources Minister Ignasius Jonan told parliament, referring to talks over mining rights with the world’s biggest publicly listed copper miner.

Indonesia wants Freeport to switch from its long-term operating contract to a new special mining license that includes new provisions on taxes and mineral processing. Freeport has said it will only do this when the government provides it with an alternative with the same fiscal and legal guarantees.

“If they agree on the special mining permit, they can export, as long as they put forward a proposal to develop a smelter within five years,” Jonan said, adding that Freeport has agreed to adopt the new permit in principle.

Freeport would be allowed to resume exports for the next six months while continuing to negotiate fiscal terms for the new permit, Jonan said, adding that the discussions would be handled by Indonesia’s finance ministry and would focus on its request for a “nailed down” tax rate and guarantees that other fiscal terms won’t change.

“Hopefully soon we will reach an agreement.”

Indonesia also wants Freeport to divest a 51 percent stake in its Indonesian unit, up from 30 percent previously. To date, it has divested 9.36 percent, and has said the divestment rules were “a form of expropriation.”

Jonan said on Thursday that a valuation for the stake would be made “at commercial or market value” but this would not include the value of Grasberg’s mineral resources.

“This must happen,” he said.

Freeport Indonesia spokesman Riza Pratama told Reuters on Thursday that the company continued to engage in a “constructive” dialogue with the government.

“We hope in the near future we will reach a solution that is acceptable to both sides,” Pratama said, declining to comment further.

Freeport warned in February that if the issues were not resolved by June 17 that it could take the dispute to arbitration and seek damages, and said there was “no returning to business as usual” at Grasberg.

Reporting by Wilda Asmarini; Writing by Fergus Jensen; editing by Susan Thomas