Freeport McMoRan to Reach Near-Term Solution to Indonesian Ore Export Ban

Located in the Sudirman Mountains of the Irian Jaya province of Indonesia, the Grasberg Mine is the largest gold mine and third largest copper mine in the world. The rim of the open pit is at about 4,270 metres (14,010 ft). Image: NASA Earth Observatory

Freeport McMoRan’s Board of Directors says this week they are “encouraged by [their] discussions with the Indonesian government” regarding a near-term agreement to enable the resumption of PT Freeport Indonesia’s (PT-FI) copper ore exports.

PT-FI owns at 90 percents stake in Grasberg, the world’s largest gold mine and third largest copper mine and it’s located in Indonesia which has banned exports of copper ore concentrate. The company notes $900 million per year is slated to be invested into Grasberg over the next five years enabling the ramp-up in production from the mine to 240,000 metric tons of ore per day.

Working with the Indonesian government, PT-FI expects “to sign imminently” a Memorandum of Understanding (MOU) that addresses new changes in PT-FI’s Contract of Work as related to the size of PT-FI’s concession area, royalties and taxes, domestic processing and refining, divestment, local content, and continuation of operations post-2021.

Most importantly, the MOU would enable the immediate resumption of exports, according to Freeport McMoRan.

Under the MOU, PT-FI would agree to provide a $115 million assurance bond to support its commitment for smelter development, pay reduced export duties that would decline as smelter development progresses and pay increased royalties of 4 percent for copper and 3.75 percent for gold from the current rates of 3.5 percent for copper and 1 percent for gold.