Freeport-McMoRan Copper & Gold Inc. (FCX:US), the owner of the Grasberg mine in Indonesia, said it’s working “cooperatively” with the government to clarify the situation surrounding a ban on unprocessed raw-material exports.
The company intends to abide by the terms of its contract of work, which allows it to operate the copper and gold mine, the Phoenix-based company said yesterday in an e-mail. It’s also committed to studying the viability of constructing additional smelting capacity in the country, it said.
Indonesia plans a blanket ban on shipments of raw mineral ores after Jan. 12 to increase the value of commodity exports and encourage development of the local processing industry. The prohibition, ordered by the 2009 Mining Law and backed by parliament last week, helped spur a rally in global metal prices, including copper and nickel.
“We intend to honor and abide by our contract of work which allows the company to export concentrates and to promote economically feasible downstream investments,” Freeport said in the statement. The company ships the material under long-term contracts to international smelters and “will continue to honor these contracts,” it said.
Copper advanced 1.2 percent this week and nickel climbed 1.8 percent, reaching the highest in more than a month, amid concern over the ban. Freeport operates the world’s second-largest copper mine in Indonesia. The country is also the biggest mined nickel producer, the top shipper of tin and the leading supplier of bauxite to China.
PT Freeport Indonesia will have to cut mine production to about 40 percent of maximum capacity and need to lay off workers if the ban is fully imposed, President Director Rozik B. Soetjipto, said Dec. 6. Part of the mine’s supply goes to PT Smelting, the country’s only copper smelter.
The government is committed to imposing the export ban as mandated by the mining law, Bachrul Chairi, director general of foreign trade at the Trade Ministry, said in a text message this week. Nine metal smelters are expected to start operations by the end of 2014, he said.
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