Shares in Freeport McMoRan Inc (NYSE:FCX) tanked Tuesday morning following the world’s second largest copper miner’s announcement that it was giving Indonesia a majority stake in its massive Grasberg copper and gold mine
Freeport has agreed to reduce its stake in the Grasberg mine to 49% in exchange for licenses to operate the massive copper and gold pit until 2041.
The deal means Freeport is granting a 51% ownership in the mine to Indonesia and has committed to build smelters in the country. In return, the US miner will be allowed to keep the mine open until 2041.
The tentative agreement is meant to put an end to mounting public rage over foreign ownership of Indonesia’s biggest copper asset. It could also bring closure to years of disagreements between the Phoenix, Arizona-based company and the country’s government, which curbed output at the mine, impacting metals prices worldwide.
The deal is considered a victory for President Joko Widodo, who faces re-election in 2019 and who has insisted that mining companies must divest majority stakes in order to continue operating in the country.
“The result of this negotiation is in accordance with the instructions of President Joko Widodo to prioritize the national interest, the interests of the people of Papua, the sovereignty of the state in the management of natural resources, and keep the investment climate remains conducive,” the Ministry of Energy and Mineral Resources said in a statement.
The two parties still have to negotiate the details of the agreement, including what the Indonesian government might have to pay for the stake in Grasberg, responsible for more than a quarter of Freeport’s total output.
Last year, the iconic mine — the world’s largest gold mine and second-largest copper operation — generated more than 500,000 tonnes of copper and over 1 million ounces of gold.
Freeport’s stock was down almost 4% to $14.91 in New York at 9:45AM local time. Year-to-date, shares are up more than 13%, compared with a 23% increase in the benchmark copper prices on the London Metals Exchange.
15 Comments
Reality forgotten with greed
And if Freeport McGowan and other expat companys walk out of the country tomorrow it will all fall over in a month these country’s seem to forget they aren’t putting anything in to get 51% and they don’t have the expertise or resources to do it….They just live of greed without future consequences.
Hukam Chand Dahiya
Not really!! Resources may be constrained, but expertise will be available.
Vatso Katvis
Similar to Venezuela ??
The irony of reality
Pfft, yeah, like how Freeport McGowan and other expat companies are so noble and greedless. What president Jokowi is trying to do is to prevent a disgusting monopoly that has been happening, and if Freeport really dont like it, they can walk out, and reality is, they dont.
Cam Parker
Not Indonesia’s mine!!!!!!!!
Steven Walker
Welcome to the “Turd World” where “Regulations and Rules” change overnight.
Mike Failla
Who didnt see this coming? Invest in the U.S.
Steven Walker
I’m sure management are walking away, AS USUAL with the shareholder’s money?
Mine in a more stable environment? GladstoneGoldMine.com
Steven Walker
Oh yes, and build “Joko the Joke” new smelters with the shareholders’ money, just to get them taken by this corrupt regime also? Are shareholders this STUPID? Time to dump FCX.
Irony strikes again
Yeah, so Indonesia should donate the natural to trump regime to wage wars and control the world for the glorious USA regime. Wonder why shareholders are that stupid with that much money compared to steven walker lol
Steven Walker
Hey skippy strikes again…..Does Trump own Freeport? Idiot much?
Dave M
Short term personal gain for Indonesian politicians….Long term big loss for the people of Indonesia!!!
Stephen Ind
I would like to see the original of the quote in the article:
“‘The result of this negotiation is in accordance with the instructions of President Joko Widodo to prioritize the national interest, the interests of the people of Papua, the sovereignty of the state in the management of natural resources, and keep the investment climate remains conducive,'”
Andrés Sorribes Fernandez
Build smelters for what? Surely for reducing transport costs but with environmental problems growing( add to contaminated river by grasberg mine in indonesia) ; look at norilsk, russia with nickel smelter, one of top contaminated places of the world, so sad…
??
Concern art
Do not believe people who
cannot even spell correctly FREEPORT McMORAN !!