Brixton Metals teams up with Eldorado on Atlin Goldfields project
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Freeport-McMoRan’s Grasberg mine — world’s largest gold and third-largest copper mine. Image from archives.
Talks between Indonesia and US miner Freeport-McMoRan Copper & Gold (NYSE:FCX) to resolve a dispute over a mineral export tax are bearing their first fruits, as the parties agreed Monday on a Memorandum of Understanding (MoU).
Shares in the company jumped on the news, hitting a new 52-week high. The stock was trading at US$38.74 in New York at 3:30 pm ET.
Today’s agreement is considered a major step forward in the quest by the Arizona-based firm for resuming copper exports from the country, which imposed new rules on Jan. 12 and introduced a progressive tax on concentrates, a semi-processed ore that’s shipped to smelters for blister copper production, which is then refined into finished metal.
“We are happy and expect it will be finalized with an MoU signing,” Indonesia’s chief economic minister, Chairul Tanjung, told Reuters, referring to the contract renegotiations.
The draft MoU still needs to be approved by both the cabinet and outgoing President Susilo Bambang Yudhoyono.
Freeport is not alone in the battle against Indonesia’s exports rules, which are aimed to encourage construction of domestic smelters and refineries. The country’s top copper producer and fellow US miner Newmont Mining (NYSE:NEM) is also pushing for a resolution, as it claims the new laws, including an escalating export tax, conflict with initially signed mining contracts.
The company’s Indonesian unit filed for international arbitration last week, after failing to resolve a six-month-long dispute that pushed Newmont to declare force majeure last month at its Batu Hijau copper mine.
Negotiate or face the consequences
Indonesian authorities asked the miner’s subsidiary PT Newmont Nusa Tenggara Monday to drop its international plea against the ban and return to the negotiation table.
According to AntaraNews.com, Economic Chief Minister Chairul Tanjung said the company would, otherwise, face a “serious impact” of its legal action.
“In principle, the government wants to protect investors, onshore and offshore investors, including Newmont,” he was quoted as saying.
Both Freeport and Newmont, which account for 97% of Indonesia’s copper output, have previously argued they should be exempt from the tax, which kicks in at 25% and increases to 60% in the second half of 2016, before a total concentrate export ban in 2017.
Global copper prices, which approached a four-month high of $7,028.50 per tonne on July 2, continue to be underpinned by the disruption to supplies from Indonesia, home to Grasberg mine, the world’s No.3 copper operation, owned by Freeport.
