Indonesia’s government has extended until June 30, 2018, the temporary special mining permit it issued to PT Freeport Indonesia, a subsidiary of US-based Freeport McMoRan (NYSE:FCX).
The permit was issued to allow the miner to continue exporting copper concentrate while company representatives and government officials go on with the discussions around Freeport’s future operations in the country, which they started in early 2017. A previous extension on the permit was to expire on January 10.
According to the Jakarta Post, Finance Minister Sri Mulyani Indrawati said on Tuesday that such negotiations, which are focused on contract extension, divestment, smelter construction and fiscal and legal obligations, are almost done. Thus, Freeport is expected to receive a permanent permit before the June deadline.
The whole process began early last year because public rage over foreign ownership of the Grasberg copper-gold mine, which Indonesia’s biggest copper asset, was mounting. Following people’s outburst, President Joko Widodo made it his mission to push mining companies to divest majority stakes in order to continue operating in the country.
Within this context, which curbed output at the massive pit and had an impact on metals prices worldwide, Freeport agreed back in August to divest 51% of PT Freeport Indonesia to the country’s government and to build at least one smelter. In exchange, the miner would get licenses to operate Grasberg until 2041. A first draft of the pact, however, was rejected by Freeport in September, as management did not agree with Indonesia’s proposals on the valuation and planned method of divestment of the local unit.
Current talks seem to be moving forward and once they are finished, it is expected that the long-standing disagreements between the Phoenix-based giant and the Widodo administration come to an end.
The Indonesian government also plans to acquire Rio Tinto’s (ASX, LON, NYSE: RIO) 40% stake in Grasberg.