Freeport-McMoRan Announces Resumption of Exports from Indonesian Subsidiary
July 25 2014 - 10:28AM
Business Wire
Freeport-McMoRan Inc. (NYSE: FCX) announced today that its
Indonesian subsidiary PT Freeport Indonesia (PT-FI) received
approval from the Government of Indonesia to resume exports of
copper concentrates. PT-FI will resume full operations immediately
and concentrate exports are expected to commence in August
2014.
PT-FI has entered into a Memorandum of Understanding (MOU) with
the Government of Indonesia under which the Government and PT-FI
have agreed to negotiate an amended Contract of Work (COW), to be
completed over the next six months, to address provisions related
to the size of concession area, royalties and taxes, domestic
processing and refining, divestment, local content, and
continuation of operations post-2021. Effective with the signing of
the MOU, PT-FI has agreed to pay export duties set forth in a new
regulation issued in July 2014, to provide a $115 million assurance
bond to support its commitment for smelter development and to
increase royalties to 4.0% for copper and 3.75% for gold from the
current rates of 3.5% for copper and 1% for gold.
On July 25, 2014, the Government revised its January 2014
regulations regarding export duties to incorporate reduced rates
for copper concentrate exports for companies engaged in smelter
development. The revised regulations provide for duties on copper
concentrate exports during smelter development initially at 7.5%,
declining to 5% when development progress exceeds 7.5% and 0% when
development progress exceeds 30%.
Among other items, MOU provisions to be addressed in the
negotiation of the Amended COW include provisions for the
development of new copper smelting and refining capacity in
Indonesia which will take into consideration an equitable sharing
of costs between PT-FI (and any partners in the project) and the
Government through fiscal incentives, provisions for FCX to divest
to the Government and/or Indonesian Nationals up to a 30% interest
(an additional 20.64% interest) in PT-FI at fair value, and
continuation of operations from 2022-2041. Negotiations will take
into consideration PT-FI’s need for assurance of legal and fiscal
terms post-2021 for PT-FI to continue with its large scale
investment program for the development of its reserves.
PT-FI and the Government will commence immediate negotiations
for an amended COW that is expected to be completed within six
months. No terms of the COW other than the duties, smelter bond and
royalties described above will be changed until the completion of
the amended COW.
James R. Moffett, Chairman of the Board, and Richard C.
Adkerson, President and Chief Executive Officer of FCX, said: “We
are pleased to report the resumption of normal operations and the
completion of an MOU to enable continuing benefits of the Grasberg
operations for the Government, the local communities in Papua, our
large Indonesian workforce and our shareholders. We value
our long-term partnership with the Indonesian government and look
forward to continuing success of the Grasberg operation.”
FCX is a premier U.S.-based natural resources company with an
industry-leading global portfolio of mineral assets, significant
oil and gas resources and a growing production profile. FCX is the
world's largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals
district in Indonesia, one of the world's largest copper and gold
deposits; significant mining operations in the Americas, including
the large-scale Morenci minerals district in North America and the
Cerro Verde operation in South America; the Tenke Fungurume
minerals district in the Democratic Republic of Congo; and
significant oil and natural gas assets in North America, including
reserves in the Deepwater GOM, onshore and offshore California and
in the Haynesville shale play, and an industry-leading position in
the emerging shallow water Inboard Lower Tertiary/Cretaceous
natural gas trend on the Shelf of the GOM and onshore in South
Louisiana. Additional information about FCX is available on FCX's
website at “www.fcx.com.”
Cautionary Statement Regarding Forward-Looking
Statements: This press release contains forward-looking
statements, which are all statements other than statements of
historical facts, such as expectations relating to the outcome of
ongoing discussions with the Indonesian government regarding
PT-FI's Contract of Work and the impact of the June 2014
regulations on PT-FI's exports and export duties. The words
“anticipates,” “may,” “can,” “plans,” “believes,” “potential,”
“estimates,” “expects,” “projects”, “targets,” “intends,” “likely,”
“will,” “should,” “to be,” and any similar expressions are intended
to identify those assertions as forward-looking statements. FCX
cautions readers that forward-looking statements are not guarantees
of future performance and its actual results may differ materially
from those anticipated, projected or assumed in the forward-looking
statements. Important factors that can cause FCX's actual results
to differ materially from those anticipated in the forward-looking
statements include the outcome of ongoing discussions with the
Indonesian government regarding PT-FI's Contract of Work and the
impact of the June 2014 regulations on PT-FI's exports and export
duties and other factors described in more detail under the heading
“Risk Factors” in FCX's Annual Report on Form 10-K for the year
ended December 31, 2013, filed with the U.S. Securities and
Exchange Commission.
Investors are cautioned that many of the assumptions on which
FCX's forward-looking statements are based are likely to change
after its forward-looking statements are made, including for
example commodity prices, which FCX cannot control, and production
volumes and costs, some aspects of which FCX may or may not be able
to control. Further, FCX may make changes to its business plans
that could or will affect its results. FCX cautions investors that
it does not intend to update forward-looking statements more
frequently than quarterly notwithstanding any changes in FCX's
assumptions, changes in business plans, actual experience or other
changes, and FCX undertakes no obligation to update any
forward-looking statements.
Freeport-McMoRan Inc.Financial
Contacts:Kathleen L. Quirk,
602-366-8016orDavid P. Joint,
504-582-4203orMedia Contact:Eric E. Kinneberg,
602-366-7994
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