Freeport-McMoRan Inc. got approval from Indonesia to resume exports from its Grasberg copper operation, the world’s third-largest, six months after a dispute with the government forced it to curb output.
Indonesia has issued an export permit for Freeport’s local unit, Trade Minister Muhammad Lutfi said today in a text message. The company will resume full operations immediately and exports of copper concentrates, a semi-processed raw material, are expected to start in August, Phoenix-based Freeport said in a statement.
The world’s largest publicly traded copper producer reduced operations at the copper and gold complex by about half after new restrictions and duties were introduced in mid-January as part of a government initiative to increase local processing of raw materials. Freeport’s local unit signed a memorandum of understanding that included agreement on increased royalties, an export tax and a commitment to help build a domestic smelter, PT Freeport Indonesia President Director Rozik Soetjipto said earlier today.
Freeport rose 1.1 percent to $37.94 at 11:27 a.m. in New York. The shares have increased 0.5 percent this year.
The company also has agreed to renegotiate the so-called contract of work under which it operates in Indonesia. The government aims to conclude that process within six months, R Sukhyar, the director general of mineral and coal at the energy and mineral resources ministry, said today before the permit was issued.
Newmont Mining Corp. hasn’t resolved its own dispute with Indonesia after the U.S. company halted copper production at its Batu Hijau operation, declared force majeure and filed for international arbitration. Force majeure allows a company to miss deliveries because of circumstances beyond its control.
“We are encouraged by the news about Freeport, which we hope will pave the way for construction of a copper smelter and lead to an economically sustainable resolution of the export ban,” Omar Jabara, a Newmont spokesman, said today in an e-mail. PT Newmont Nusa Tenggara, the company that operates Batu Hijau, “has been holding ongoing meetings with the government to define the outlines of a separate memorandum of understanding that will allow production to resume.”
Grasberg was the third-largest copper operation by capacity as of 2012, according to Bloomberg Intelligence data. BHP Billiton Ltd.’s Escondida mine and Codelco’s Codelco Norte operation, both in Chile, were the largest.