(Reuters) - Indonesia’s mining minister said on Thursday the local unit of Freeport McMoRan Inc (FCX.N) could request an extension of a six-month negotiating period over rights to Grasberg, the world’s second-biggest copper mine, which is due to end next month.
Freeport and the government announced a framework agreement for a new permit late last month, under which the Phoenix, Arizona-based company agreed to divest a 51 percent stake in Grasberg, among other terms, and could retain operational control over the mine up to 2041.
A new tax regime for the mining giant is still being finalised by the finance ministry, while terms of the divestment were now being handled by the State-Owned Enterprise Ministry, Energy and Mineral Resources Minister Ignasius Jonan said on Thursday.
“The question is, what happens if they aren’t completed?” Jonan said, referring to the October deadline. “We just need to wait for Freeport to propose an extension to the negotiation period,” he added.
“God willing they will be completed (on time),” Jonan said, adding that negotiations should be completed this year.
Jakarta had halted Freeport’s copper concentrate exports in January under new rules requiring miners to adopt a special permit, pay new taxes and royalties, divest a 51 percent stake in their operations and relinquish arbitration rights.
In April, the government awarded Freeport with a permit to export 1.1 million tonnes of copper concentrate up to February next year, but said shipments could be stopped again in October if negotiations over a new permit were not resolved by then.
Negotiations over contentious issues including the divestment, economic and legal protection and domestic smelting investment, have prevented a longer-term agreement from being finalised.
Securing a final agreement on the permit still could take months of talks over the valuation of Freeport’s stake, which will partly be determined by agreeing on the trajectory of the mine’s future profits and its commercial reserves, a former mining ministry official said earlier this month.
Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing by Kenneth Maxwell