Freeport-McMoRan Updates Status of PT Freeport Indonesia Operations
February 20 2017 - 9:28AM
Business Wire
Freeport-McMoRan Inc. (NYSE: FCX) is providing an update on the
status of PT Freeport Indonesia’s (PT-FI) operations and its
discussions with the Government of Indonesia on concentrate exports
and other matters related to its Contract of Work (COW).
Following more than five years of discussions with the
Government, in which PT-FI negotiated in good faith to be
responsive to the Government’s aspirations while protecting the
rights of its stakeholders, the parties have failed to reach
agreement.
Indonesian government regulations passed in January and February
2017 require that PT-FI terminate its COW and convert to a special
license (IUPK) in order to export its concentrate production. PT-FI
has advised the Government that attempts to enforce this regulation
on PT-FI violates its COW and that it is unwilling to terminate its
COW unless replaced by a mutually acceptable form of agreement
providing fiscal and legal assurances to support its long-term
investment plans in Papua, Indonesia.
As a result, PT-FI has been unable to export concentrates and is
proceeding with its plan to suspend investments in Papua, reduce
its production by approximately 60 percent from normal levels and
implement cost savings plans involving significant reductions in
its work force and spending levels with local suppliers.
On February 17, 2017, pursuant to the COW’s dispute resolution
provisions, PT-FI provided formal notice of an impending dispute to
the Government listing the Government’s multiple breaches of the
COW.
Richard C. Adkerson, FCX President and Chief Executive
Officer, said: “Despite extensive efforts to reach an agreement
with the Government, we have been unsuccessful in achieving a
resolution that would avoid the negative impacts for all
stakeholders, especially for our workforce and the local
economy. We are simply asking the Government to honor our
legally binding Contract. We urge the Government to honor
the Contract and demonstrate that the Country remains open for
foreign investment. This would be in the best interests of all
stakeholders, including the Government of Indonesia, our large work
force, the local community, local suppliers and Freeport’s
shareholders.”
PT-FI’s first quarter production has been adversely impacted by
the suspension of concentrate exports and a temporary outage since
January 19, 2017, at PT Smelting (PT-FI’s 25 percent-owned copper
smelter and refinery located in Gresik, Indonesia). PT Smelting has
advised PT-FI that it expects to resume operations in March 2017.
Assuming resumption of PT Smelting’s operations in March and a
continuation of the ban on exports, FCX estimates its first quarter
sales will be reduced, resulting in deferrals of approximately 170
million pounds and 270,000 ounces, representing a reduction of
approximately 17 percent for copper and 59 percent for gold of its
consolidated first quarter sales.
For each month of delay in obtaining approval to export, PT-FI’s
share of production is projected to be reduced by approximately 70
million pounds of copper and 70 thousand ounces of gold.
FCX is a leading international mining company with headquarters
in Phoenix, Arizona. FCX operates large, long-lived, geographically
diverse assets with significant proven and probable reserves of
copper, gold and molybdenum. 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. Additional information
about FCX is available on FCX's website at "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. The words “anticipates,” “may,” “can,” “plans,”
“believes,” “estimates,” “expects,” “projects,” “targets,”
“intends,” “likely,” “will,” “should,” “to be,” ”potential" 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 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
FCX's ability to secure regulatory approvals, the outcome of
ongoing discussions with the Indonesian Government regarding
PT-FI’s COW, the potential effects of violence in Indonesia
generally and in the province of Papua, industry risks, regulatory
changes, political risks, labor relations 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, 2015,
filed with the U.S. Securities and Exchange Commission (SEC) as
updated by FCX’s subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which
FCX's forward-looking statements are based are likely to change
after the forward-looking statements are made, including for
example commodity prices, which FCX cannot control, production
volumes and costs, some aspects of which FCX may not be able to
control. Further, FCX may make changes to its business plans that
could affect its results. FCX cautions investors that it does not
intend to update forward-looking statements more frequently than
quarterly notwithstanding any changes in its assumptions, changes
in business plans, actual experience or other changes, and FCX
undertakes no obligation to update any forward looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20170220005425/en/
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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