Behind Indonesia mining deal, newly minted minister and U.S. mining legend

Sat Aug 23, 2014 11:38pm EDT
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By Randy Fabi, Fergus Jensen and Michael Taylor

JAKARTA (Reuters) - As negotiations to resolve an increasingly bitter dispute over Indonesian mining rules teetered on the brink of collapse, the chairman of Freeport-McMoRan Inc James "Jim Bob" Moffett flew to Jakarta for last-ditch talks.

Indonesia's chief economics minister, Chairul Tanjung, said he had got to a point where he felt only talking directly to the 76-year-old U.S. mining legend might break a deadlock in the six-month row, which had already cost Southeast Asia's top economy more than $1 billion and put thousands of jobs at risk.

In less than two hours the two men had reached an agreement, setting the stage to resume exports and restore badly needed government revenue to the world's fourth most populous nation.

"I just convinced him that this was the maximum the government can give," Tanjung said in an interview. "He believed me, I believed him and we shook hands. Very simple."

Tanjung, one of Indonesia's richest businessmen, was appointed minister in May and made reaching a deal to get mining exports going again a priority to revive an economy suffering its sharpest slowdown since the global financial crisis.

But a looming presidential election had made it even harder to reach a politically unpopular compromise with foreign miners.

Aside from any chemistry between the two successful businessmen, the breakthrough came because Moffett had taken a more flexible approach, said Tanjung.

The dispute with Freeport had centered on its refusal to pay an escalating mineral concentrate export tax and its bid to extend its mining contract. The meeting was only attended by a small number of Indonesian officials and Freeport, and according to Tanjung the solution was to focus on what the two could agree on to get exports restarted and set other issues aside for now.   Continued...

Indonesia's chief economics minister Chairul Tanjung (C) talks with his colleague, Trade Minister Muhammad Lutfi (L), as Home Affairs Minister Gamawan Fauzi looks (R) on during a news conference in Jakarta August 20, 2014. REUTERS/Beawiharta