Freeport-McMoRan CEO: Seeks To Cooperate With Indonesia Government
April 19 2012 - 12:31PM
Dow Jones News
Freeport-McMoRan Copper & Gold Inc. (FCX) chief executive
said the company's Indonesian operations are not subject to a 20%
divestment requirement as they are not covered by the country's new
mining laws.
Freeport-McMoRan, the world's largest listed copper-mining
company, operates the Grasberg copper and gold mine in Indonesia,
the world's third-largest open pit copper mine.
Freeport's Grasberg operations, including royalty and tax rates
owed to the Indonesian government, are covered by a "Contract of
Work" agreement with the Indonesian government that the company
signed in 1991. This agreement provides for higher fixed tax rates,
but lower copper and gold royalties than the new mining laws.
"The new mining law provides for 20% divestiture...we are under
our existing COW, not the new mining law," CEO Richard Adkerson
said.
He added that Freeport has voluntarily agreed to offer a 9.36%
interest in Grasberg to Indonesian national, though no transaction
has yet taken place.
"There is no requirement for us to sell it," Adkerson said.
Freeport's aggregate payments to the Indonesian government are
higher than the prevailing law, Adkerson said.
The Indonesian government has undertaken a review of all
existing mining contracts since instituting its new mining law.
"We continue to be responsive to all issues raised by the
government," Adkerson said. "We are going to find ways of working
cooperatively."
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095;
tatyana.shumsky@dowjones.com
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