Boston, MA 07/08/2014 (wallstreetpr) – Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) agreed to the Memorandum of Understanding (MoU) with the Indonesian government, which marks a major step towards the resumption of copper export from the country after several months. The agreement hinges on contract renegotiations.
The dispute between copper miners in Indonesia and the government began earlier this year when the company introduced surprise tax on copper exports. The new export tax is seen as part of a broader scheme by the government to compel miners to build smelters and processing plants in the country.
For about six months, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) and the government have been involved in talks to resolve the standoff.
The company halted copper export in January following the introduction of a new copper tax. It claimed the surprise tax violates the terms of its mining contracts.
Signing The Mou
Freeport (NYSE:FCX) having accepted the terms of the draft MoU, the document will be approved by both the president and the cabinet. The date for the next cabinet meeting has not been given, yet the country is heading into presidential elections this week.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) owns and operates the Grasberg complex, which is the largest gold and copper mine in the world. The company has been seeking an extension of its contract for the site beyond 2021. However, the government has all along insisted that the contract can only be renewed in 2009 at the earliest. Even if the contract is extended, it is likely the new deal will be a different one from the current contract.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) has been fighting alongside Newmont Mining Corp (NYSE:NEM) to challenge the surprise copper export tax. Newmont is the leading copper producer in Indonesia. The company also claims the export tax violate its original mining contract.
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) and Newmont together control 97 percent of the copper output in Indonesia. They are seeking exemption from the new copper export tax.