JAKARTA, July 2 (Reuters) – A deadly tunnel collapse at Freeport McMoRan Copper and Gold’s Indonesian mine seven weeks ago should not delay contract talks with the U.S.-based firm, a member of the government negotiating team said, adding that he hoped to strike a deal as soon as possible.
Contract talks between Freeport Indonesia and the government were put on hold after a training area in a tunnel caved in on May 14, killing 28 people at the world’s No.2 copper mine in remote West Papua.
“It is tragic what happened, but Indonesia needs to be cognizant of where it needs to be going forward as an economic relevance to the world,” Trade Minister Gita Wirjawan told Reuters. “It is important for a conclusion to be reached sooner rather than later because it will reflect upon the desires of both Freeport and the Indonesian government.”
“ASAP,” said Wirjawan, when asked about the ideal time for the talks to be concluded. “I’m hopeful that there will be a meeting of minds between both sides.”
Open-pit mining at Freeport’s Grasberg mine is due to end after 2016, just five years before its current mining contract expires. Freeport estimates it will cost about $15 billion to turn the complex into a vast underground mine, an investment that only makes sense if it has a new contract with the Indonesian government beyond 2021.
The contract renegotiations have rumbled on for more than a year, with the government seeking bigger royalty payments, commitments on domestic processing and greater divestment by foreign miners.
Freeport currently owns 90.64 percent of Freeport Indonesia, while Indonesia’s government owns about 9 percent.
“Things are moving in the right direction in terms of royalty distribution,” said Wirjawan, who is part of the negotiating team led by chief economics minister Hatta Rajasa.
“There are one or two things that might have been pending — one of which is the degree to which they would be open minded with building a smelter.”
Last year Indonesia asked all miners to submit plans to build refineries or smelters ahead of a January 2014 ban on raw mineral exports.
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