Freeport-McMoRan Inc. signed a memorandum of understanding with the Indonesian government and may restart exports in two weeks from the world’s third-largest copper operation.
The company’s local unit agreed to pay an export tax and put down a $115 million guarantee as a commitment to help build a domestic smelter, PT Freeport Indonesia President Director Rozik Soetjipto told reporters in Jakarta today. Freeport may resume exports of copper concentrate, a semi-processed raw material, in the next two weeks, R Sukhyar, the director general of mineral and coal at the energy and mineral resources ministry, said later.
Freeport reduced operations at its Grasberg 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. Output will return to normal when exports are allowed to resume, Soetjipto said. The Indonesian energy ministry has issued a recommendation to the trade ministry for the issuance of an export permit, he said.
Freeport 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, Sukhyar said.
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.