Freeport Says Indonesia Exports Could Resume Soon
Freeport-McMoRan Inc said on Wednesday it expects to "imminently" sign an agreement with Indonesia that would enable it to immediately resume copper concentrate exports which have been halted for more than six months.
Freeport said on July 8 it had agreed on a draft memorandum of understanding but had not signed it. At the time, it gave no time frame on when it would resume exports. Indonesia introduced a mineral ore export ban and a steep export tax in January.
The gold and copper miner also reported second-quarter results on Wednesday that were little changed from a year-ago.
"It is a compromise to create a bridge for us so that we can return to normal operations," Chief Executive Richard Adkerson said of the MoU on a call with analysts and investors.
Under the agreement, Freeport would pay a "significantly reduced" export duty in 2014, 2015 and 2016 but higher royalties on copper and gold sales. It would also pay a $115 million "assurance bond" against development of a smelter, Adkerson said.
Freeport, which owns and operates the massive Grasberg mine, wants financial incentives from the government to build a new smelter. Indonesia imposed the new rules partly to spur construction of smelters in the country, but miners have said building new capacity does not make economic sense.
Adkerson said the negotiations also involve agreeing on terms to extend Freeport's operations beyond 2021, when its current contract with the government expires.
Indonesia's new president said on Tuesday he planned to sit down with Freeport and other miners to resolve the row, which has halted $500 million of metal exports a month in Southeast Asia's biggest economy. Newmont Mining Corp's concentrate exports are also halted, and it has stopped production and filed for international arbitration.
Freeport has cut production in Indonesia, which weighed on results in the quarter ended June 30, but company-wide, copper, gold and molybdenum production rose.
The year-earlier figures included only one month of results from Freeport's recently acquired oil and gas businesses, so that segment's revenue jumped to $1.24 billion from $372 million.
Net income was $482 million, or 46 cents a share, compared with $482 million, or 49 cents, a year earlier. Revenue rose to $5.52 billion from $4.29 billion a year earlier, boosted by the energy acquisitions.
Analysts, on average, had been expecting earnings of 51 cents a share on revenue of $5.34 billion, according to Thomson Reuters I/B/E/S.
Freeport said it would continue to look for ways to reduce its debt, which could include asset sales or reducing or deferring capital spending. It ended the quarter with $20.3 billion of debt.
(Reporting by Allison Martell in Toronto and Nicole Mordant in Vancouver; Editing by Bernadette Baum, Amran Abocar and Richard Chang)