* Copper concentrate production halted since Friday
* Exports could resume next week -govt official
* Freeport hopes to gain new investment guarantees
(Recasts; adds government comment)
By Fergus Jensen
JAKARTA, Feb 14 Freeport-McMoRan Inc has
halted production of concentrate at the world's second-largest
copper mine in Indonesia and has begun to send workers home, a
spokesman for the company's local unit said on Tuesday.
The Southeast Asian nation on Jan. 12 introduced rules
restricting copper concentrate exports in a bid to boost its
domestic smelting industry.
Freeport previously said the suspension of concentrate
exports would require the Grasberg mine to slash output by
around 70 million pounds of copper per month.
The halt comes at the same time as a stoppage at the world's
biggest copper mine in Chile, fueling supply worries and helping
support prices for the metal near 20-month highs touched
"The processing plant has not been producing concentrate
since last Friday," Freeport Indonesia spokesman Riza Pratama
told Reuters on Tuesday.
The world's biggest publicly-traded copper miner has also
started sending workers home from Grasberg, he added.
The company previously said it would need to cut production
to about 40 percent of capacity if it did not get an export
permit by mid-February, due to limited storage.
But a strike at Freeport's sole domestic offtaker of copper
concentrate, PT Smelting, expected to last at least until March,
has limited Freeport's output options, and Grasberg's storage
sites are now full.
Under new regulations announced in mid-January, Freeport and
some other miners could be allowed to keep exporting
semi-processed ores and concentrates if they meet conditions
including shifting from their current 'contracts of work' to
so-called 'special mining permits', a move that could leave them
liable to paying more in taxes.
Although the government said on Friday it had issued the new
mining permit, Freeport said no agreement had been reached on
the terms that were "necessary and critical" for its long-term
investment plans, and that an export ban remained in
Freeport was still seeking "investment stability guarantees
from the finance ministry", a mining ministry official told
Reuters on Tuesday, declining to be identified as he was not
authorised to speak with media.
Another official at the ministry said on Tuesday that
Freeport's exports could resume as soon as "next week" once it
applied for an export permit.
"We have provided a way for them," Coal and Minerals
Director General Bambang Gatot told reporters, referring to the
new mining permit. "Their operations can continue," he said,
stopping short of providing details.
Gatot, who was unaware of the production stoppage, declined
to say whether terms under Freeport's existing contract would
still be applied.
In 2014, Freeport's Indonesian copper concentrate exports
were suspended for six months while it negotiated new mining
(Additional reporting by Wilda Asmarini in Jakarta; Writing by
Susan Taylor in Toronto; Editing by Tom Hogue and Joseph