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 (FCX.N) 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 centred 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.
Freeport agreed to a $115 million downpayment for a smelter, to pay higher royalties and divest more of its Indonesian unit.
Indonesia in return substantially cut the concentrate export tax for Freeport and other miners building smelters.
Moffett is a likeable and larger-than-life Louisiana businessman, known for his Elvis impersonations during lighter moments, but also a shrewd deal maker.
Starting his career as a wildcat prospector in Louisiana, Moffett founded McMoRan Oil & Gas Co with two of his partners in 1969 and put together the merger with Freeport 12 years later.
With a 47-year history in Indonesia, Freeport’s fortunes were transformed by the discovery of the Grasberg mine in Papua, one of the world’s biggest deposits of gold and copper.
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