(Adds analyst scepticism on agreement, analyst comment,
divestment valuation background, updates stock price)
By Wilda Asmarini and Susan Taylor
JAKARTA/TORONTO, March 30 Freeport McMoRan Inc's
Indonesian unit is close to reaching a deal that would
allow the world's biggest publicly listed copper producer to
temporarily resume concentrate exports, Indonesia's mining
minister said on Thursday.
The news boosted Freeport's stock more than 6 percent as it
is a marked shift in tone from the Southeast Asian nation, which
banned miners from shipping copper concentrate on Jan. 12 as
part of a hard line push to develop its local smelter industry
and boost domestic benefits from mining.
Energy and Mineral Resources Minister Ignasius Jonan said a
new deal would allow Freeport to resume exports for the next six
months from Grasberg, the world's second-biggest copper mine,
while a new permit is negotiated.
"Freeport Indonesia has entered the final stage of
discussions," Jonan told parliament, adding the finance ministry
will oversee talks, focusing on a "nailed down" tax rate and
guarantees fiscal terms will not change.
"If they agree on the special mining permit, they can
export, as long as they put forward a proposal to develop a
smelter within five years," Jonan said, adding Freeport agreed
to adopt the new permit in principle.
Freeport stock climbed 6.1 percent to $13.50 in New York
Phoenix, Arizona-based Freeport said it was progressing
"constructive discussions" that would allow it to resume
exports, while retaining its current contract until there is
agreement on a new permit.
Indonesia wants Freeport to adopt a license that includes
new taxes and royalties, but Freeport insists on retaining
fiscal and legal guarantees.
Analysts were skeptical that a deal is close, noting big
hurdles including taxes, divestment and the right to
"Ultimately, both sides have a tremendous incentive to find
a resolution, but it seems like there are still significant
hurdles," said Jefferies analyst Chris LaFemina.
"It's not clear to me that those long-term issues are any
closer to being resolved."
Under the ban, Freeport has shelved billions of dollars of
planned investments, but is taking a hit on Grasberg, which
represents about a third of its cash flow, on average, said
Freeport must also to divest 51 percent of its Indonesian
unit - up from 30 percent - under the new permit.
Last year, Freeport valued Grasberg at $16.2 billion. It
offered a 10.64 percent stake, for $1.7 billion, to the
government, which proposed $630 million.
Jonan said a valuation would reflect "commercial or market
value", but not include the value of mineral resources.
If permit issues are unresolved by June 17, Freeport has
warned it could go to arbitration and seek damages.
(Reporting by Wilda Asmarini in Jakarta and Susan Taylor in
Toronto; Writing by Fergus Jensen; Editing by Susan Thomas and