Indonesia‘s government and Freeport McMoRan Inc are meeting on Thursday in last-ditch talks to prevent a halt in exports of copper concentrate from the U.S. mining giant’s massive Grasberg mine in the province of Papua.
A halt in exports would deal a blow to Freeport‘s profits and deny the Indonesian government desperately needed revenue from one of its biggest taxpayers. A stoppage would also buoy global copper prices that have slipped 3 percent so far this year on worries about oversupply.
Freeport‘s six-month export permit for its Indonesian unit expires on Thursday but it is still unclear how soon a new one will be issued as the two sides have yet to resolve a government demand that the U.S. firm first pay a $530-million deposit.
“There has been no information whatsoever from Freeport that states whether they are able to pay or not,” Mohammad Hidayat, the mine’s ministry director of minerals, told reporters on Thursday.
“If an export permit extension is not issued today, that means that starting from the 29th they cannot export any more.”
Energy Minister Sudirman Said said he was certain the government would approve the export permit and was open to negotiations with Freeport on the $530 million deposit.
“They are trying hard to fulfil requirements but asked us to consider the global commodities condition and their financial condition. Let’s seek a solution together,” Said said.
Freeport officials were not immediately available to comment on Thursday. The company has previously said it was confident it would obtain a new export license.
Jakarta wants the half-a-billion dollar deposit as a guarantee that the Phoenix, Arizona-based company will complete construction of another local smelter. The amount would add to an estimated $80 million that Freeport set aside in July 2015 to obtain its current export permit.
Said said if Freeport does not want to provide the deposit, the company must offer an alternative to demonstrate their commitment to expanding Indonesia‘s smelter capacity.
Freeport CEO Richard Adkerson said late Tuesday the government’s demand for a smelter deposit was “inconsistent” with an agreement reached between the two sides in mid-2014.
According to those agreements, Freeport must sell the government a greater share of the Grasberg copper and gold mine and invest in domestic processing to win an extension of its mining contract beyond 2021.