JAKARTA: Indonesia’s government has set itself a two-week deadline to resolve a dispute with Freeport-McMoRan Inc that has led to the suspension of copper concentrate exports from the world’s second-largest mine for almost two months.
The Energy and Mineral Resources Minister Ignasius Jonan is working with Freeport to end the stalemate, said a senior government official, declining to be identified.
An end to the dispute may pave the way for Freeport to resume overseas shipments of the semi-processed copper ore and withdraw its notice of international arbitration against the Southeast Asian nation. Freeport resumed some operations at its Grasberg mine this week to supply ore to a domestic smelter after shutting it in January following a government ban on exports.
While Freeport has operated for years in Indonesia under a Contract of Work, which provides legal and fiscal guarantees, it’s now required to switch to a special mining licence, or IUPK, that doesn’t provide the same safeguards under new rules issued in January. The miner served a notice to the Energy Ministry on February 17 over the areas of dispute, and says it has the right to begin arbitration if they aren’t settled within 120 days.
Freeport can keep its Contract of Work if there’s no resolution in talks with the government within six months, the Energy and Mineral Resources Ministry said in a statement on its website. Jonan declined to comment on the two-week deadline and said he’ll speak when the dispute is resolved, according to a text message from the minister. Local unit Freeport Indonesia will continue its discussion with the government, spokesman Riza Pratama said.
Freeport has maintained it wants to resolve the dispute amicably and the Indonesian government too has signalled it wants a deal. “We want to find a win-win solution,” President Joko Widodo told reporters in Jakarta on February 23. “But if it’s indeed difficult to find common ground, and difficult to begin a discussion, we will take action,” he said, without elaborating.
Bank Indonesia senior deputy governor Mirza Adityaswara said on Thursday Freeport had a long time to prepare for the change in the mineral rules and a company operating in Indonesia for several decades should “contribute more.”
“We believe the government is also serious in finding the solution. But I think it has to be coming from both sides,” he said in an interview.
The disruption of exports from Grasberg coincides with a strike at the world’s largest copper mine at Escondida in Chile, and has supported global prices of the metal. Freeport also has a dispute at its Cerro Verde mine in Peru where about 1,500 union members are set to begin an indefinite strike over pay on Friday, according to the union. Copper prices climbed 0.9% to $5,739 a tonne by 9:35am in London, and are up 3.7% this year.
