Indonesia Reaches Agreement With Freeport on New Mining Permit for Grasberg – 29 Aug 2017

• Indonesia and Freeport-McMoRan on 29 Aug 17 reached an agreement to allow the US miner to keep operating its giant Grasberg copper and gold mine, though the timing and price of a 51% divestment in the mine still needs to be worked out.
• Freeport, the world’s biggest publicly traded copper company, can apply for an immediate 10-year permit extension to mine at Grasberg beyond 2021, said Indonesian Energy and Mineral Resources Minister Ignatius Jonan. Grasberg is the world’s second-biggest copper mine.
• “The mandate of the president, which has been agreed to by Freeport, is that the divestment should reach 51% in total,” Jonan told a joint news conference, alongside Freeport’s Chief Executive Officer Richard Adkerson. “All that is left is to discuss the timing. The price will be negotiated later,” said Jonan.
• Revised rules in Indonesia require miners to divest a 51% stake, relinquish arbitration rights and pay new taxes and royalties. Freeport has insisted on getting the same fiscal and legal protection as in its current contract.
• The mining minister said Freeport could “immediately apply” for its first 10-year permit extension and a second extension could be proposed before 2031.
• Freeport’s copper concentrate exports from Indonesia were at risk of being halted again if the two sides had failed to reach an agreement on a new mining permit before the current temporary permit expired in Oct 17. Freeport exports around two-thirds of the copper concentrate it produces at Grasberg and the remainder is processed domestically.
• Phoenix, Arizona-based Freeport has held lengthy talks with the Indonesian government over issues such as the amount and valuation of the divestment and the development of a new smelter to extend its 30-year mining contract, which is due to expire in four years time.
• Adkerson said the existing contract of work would remain in place until everything was settled, but stressed that the company had given ground.

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