Midnight Sun receives exploration license renewal for Solwezi copper project in Zambia
The project is 6 miles from Africa’s largest copper mining complex, the Kansanshi mine held by First Quantum Minerals.
JAKARTA (Reuters) – Indonesia’s mining minister said on Thursday that Freeport McMoRan Inc could request an extension of six months to renegotiate rights to Grasberg, the world’s second-biggest copper mine, which is due to end next month.
Freeport and the government announced a framework agreement for a new permit late last month, under which the company agreed to divest a 51 percent stake in Grasberg, among other terms, and retain operational control until 2041.
Freeport shares were up 3.4 percent to $14.48 on Thursday, lifted by Indonesia’s “more conciliatory tone,” said Clarksons Platou global mining analyst Jeremy Sussman.
A new tax regime for Freeport, the world’s biggest publicly traded copper miner, is still being finalised by the finance ministry, while divestment terms are being overseen by the state-owned Enterprise Ministry, Energy and Mineral Resources Minister Ignasius Jonan said on Thursday.
“The question is, what happens if they aren’t completed?” Jonan asked, referring to the October deadline. “We just need to wait for Freeport to propose an extension to the negotiation period,” he added.
“God willing they will be completed (on time),” Jonan said, adding that negotiations should be completed this year.
Phoenix, Arizona-based Freeport did not immediately respond when asked if it had requested an extension.
Jakarta halted Freeport’s copper concentrate exports in January under new rules requiring miners to adopt a special permit, pay new taxes and royalties, divest a 51 percent stake in their operations and relinquish arbitration rights.
In April, the government awarded Freeport a permit to export 1.1 million tonnes of copper concentrate until February next year, but said shipments could be stopped again in October if negotiations over a new permit were not resolved by then.
Negotiations over contentious issues including divestment, economic and legal protection and domestic smelting investment have prevented a longer-term agreement from being finalised.
Securing a final agreement on the permit still could take months of talks over the valuation of Freeport’s stake, which will partly be determined by agreeing on the trajectory of the mine’s future profits and its commercial reserves, a former mining ministry official said earlier this month.
(Reporting by Wilda Asmarini in Jakarta and Susan Taylor in Toronto; Writing by Fergus Jensen; Editing by Kenneth Maxwell and Jeffrey Benkoe)
