Freeport-McMoRan Inc. (NYSE:FCX)
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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; email@example.com
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