5 Apr 2017

Way forward found in Freeport dispute with Jakarta

10:37 am on 5 April 2017

The mining giant Freeport has agreed on a way forward to a resolution in its prolonged dispute with the Indonesian government over its Papua operations.

Freeport-McMoran mine in West Papua.

Freeport security personnel looking on at the Freeport McMoRan's Grasberg mining complex. Photo: AFP PHOTO / OLIVIA RONDONUWU

After months of strained negotiations over the renewal of Freeport's contract to mine the large Grasberg gold and copper deposit in Papua, it appears the miner may be willing to divest some of its majority share to Indonesia.

The Jakarta Post reported Indonesia's Energy and Mineral Resources Minister Ignasius Jonan as saying the parent company Freeport-McMoRan had agreed to allow its contract of work to be converted into a special mining permit.

Relations between the two parties became tense after a mineral export ban took effect in January under a government order.

Freeport Indonesia has been pressed by Jakarta to divest 51 percent of its shares, build a smelter within five years and convert its contract in exchange for a permit to export copper concentrate.

Freeport Indonesia spokesman Riza Pratama said the company was still negotiating the terms with the government.

As a result of the export ban, Freeport had been unable to sell its copper concentrates overseas, leading to a large pile-up that halted its mining operations.

Earlier this month, Freeport resumed production at 40 percent of its normal rate after securing an export permit for anode slime, a by-product of copper processing.

Meanwhile, some Indonesian lawmakers called on the central government to seek input from the Papuan people before making any future policy about the miner.

"We ask the energy and mineral resources minister to involve Papuan locals in any decision-making process pertaining to Freeport Indonesia in order to comply with the Regional Autonomy Law," chairman Gus Irawan Pasaribu said.