UPDATE 4-Freeport says Indonesia exports may resume soon; Newmont in talks

Wed Jul 23, 2014 6:38pm EDT
 
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(Adds Newmont comment, background)

July 23 (Reuters) - Freeport-McMoRan Inc said on Wednesday it expects to "imminently" sign an agreement with Indonesia that would enable it to immediately resume copper concentrate exports which have been halted for more than six months.

In a sign that the deadlock could be nearing an end, Newmont Mining Corp also said it was negotiating a memorandum of understanding that could restart stalled shipments.

Arizona-based Freeport said on July 8 it had agreed on a draft memorandum of understanding with the Indonesian government but had not signed it. At the time, it gave no time frame on when it would resume exports. Indonesia introduced a mineral ore export ban and a steep export tax in January.

"It is a compromise to create a bridge for us so that we can return to normal operations," Freeport Chief Executive Richard Adkerson said of the MoU on a call with analysts and investors after the miner reported second-quarter results that were little changed from a year-ago.

Under the agreement, Freeport would pay a "significantly reduced" export duty in 2014, 2015 and 2016 but higher royalties on copper and gold sales. It would also pay a $115 million "assurance bond" against development of a smelter, Adkerson said.

Freeport, which owns and operates the massive Grasberg mine, wants financial incentives from the government to build a new smelter. Indonesia imposed the new rules partly to spur construction of smelters in the country, but miners have said building new capacity does not make economic sense.

Adkerson said the negotiations also involve agreeing on terms to extend Freeport's operations beyond 2021, when its current contract with the government expires.

  Continued...