JAKARTA (Reuters) – Indonesia has reached a deal to let Freeport-McMoRan Inc keep operating its giant Grasberg copper mine, after the U.S. company agreed to sell a majority stake following years of wrangling.
Freeport said on Tuesday it had made a “major concession and compromise” in agreeing to sell a 51 percent stake, and to build a second smelter in Indonesia. The company said the deal would be structured in a way that Freeport would retain control over the operations and governance of its Indonesian business.
“We are committed to completing the documentation as soon as possible during 2017,” Chief Executive Richard Adkerson said in a statement. Freeport’s shares were marginally down at $15.46 in premarket trading. Freeport has been in talks with Indonesia since late 2009 to work out how to shift to a new permit for Grasberg, the world’s second-biggest copper mine, as mandated in a mining law passed that year.
Top-quality copper mines remain rare and the agreement underlines the mine’s importance to Freeport, the world’s biggest publicly listed copper miner, which produces a quarter of its copper from Grasberg.It also marks the return of a more muscular stance from a host government, a trend that was common during the commodities boom.
Freeport can “immediately apply” for a 10-year permit extension to mine at Grasberg beyond 2021, said Indonesian Energy and Mineral Resources Minister Ignasius Jonan, and a second extension could be proposed before 2031.
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