By Ben Fox Rubin 
 

Freeport-McMoRan Copper & Gold Inc. (FCX) said its PT Freeport Indonesia unit may declare a force majeure under its sales agreements if it is unable to resolve an export tax issue with the Indonesian government.

Companies often invoke force majeure clauses in contracts when circumstances they couldn't have foreseen, such as fires, natural disasters and wars, prevent them from meeting delivery deadlines.

Freeport, the world's largest publicly traded copper producer, said in a recent regulatory filing that the Indonesian government last month published regulations imposing new duties on copper-concentrate exports. Copper concentrate is a form of crushed copper ore that is typically smelted into shiny red sheets of pure copper.

According to its contract, PT Freeport Indonesia won't be subject to new taxes, duties or fees, Freeport said. The unit is also seeking the required permits for 2014 exports, which have been delayed due to the new regulations.

Since mid-January, the unit's milling rate has averaged about 112,000 metric tons of ore a day, which is about half of normal rates.

Although discussions with the Indonesian government continue, Freeport said that if normal operations don't resume, it plans to consider actions including constraining operating costs, deferring capital expenditures and implementing workforce reductions, in addition to the force majeure.

The unit operates in the remote highlands of the Sudirman Mountain Range in the province of Papua, Indonesia.

The Phoenix mining company's aggressive expansion plans, in places as diverse as Arizona and Indonesia, are part of an increase in supply that, along with lower Chinese demand, have deflated copper prices in the past year.

Write to Ben Fox Rubin at ben.rubin@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Freeport McMoRan (NYSE:FCX)
Historical Stock Chart
From Aug 2024 to Sep 2024 Click Here for more Freeport McMoRan Charts.
Freeport McMoRan (NYSE:FCX)
Historical Stock Chart
From Sep 2023 to Sep 2024 Click Here for more Freeport McMoRan Charts.