Gov't, Freeport Extend Negotiations for Six Months
Jakarta. The Ministry of Energy and Mineral Resources and Freeport Indonesia, the local unit of the United States mining giant Freeport-McMoRan, agreed on Wednesday (08/03) to extend for six months negotiations over Freeport's continued use of copper mines, reflecting both parties' desire to reach an agreement.
Previously, Freeport issued an ultimatum that negotiations should conclude within a 120 day period, in accordance with provisions outlined in the company's current contract with the government, or the company would sue the government.
"We agreed to add six months in order to find a solution," said Teguh Pamudji, secretary general of the ministry.
Teguh declined to comment on whether or not Freeport's previous ultimatum will still stand if the extended negotiations conclude without tangible results.
In January, the government issued new rules that effectively blocked Freeport from exporting copper concentrates unless the company adopted a new permit that would terminate its current contract and impose new terms including the provision of a special mining business license.
Freeport-McMoRan chief executive Richard C. Adkerson said in a statement on Feb 17 that the company will only agree to the new provisions if it is granted immunity from future changes in the national law or tax rates.
At stake over the negotiations is Freeport Indonesia's continued copper exports, which totaled an astonishing $2.4 billion last year.
The company has started operating at a limited capacity and will dismiss more than 1,000 of its employees should the talks sour.
Freeport has also put on hold its commitment to invest $15 billion that would expand its Grasberg copper mine in Papua until the Indonesian government gives it the right to operate beyond 2021.
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