New copper tax clouds Freeport McMoRan's outlook in Indonesia

|By:, SA News Editor

Freeport McMoRan (FCX -1.5%) may face as much as $5B in extra taxes over the next three years if it fails to convince Indonesia's government to back down from a new export tax.

FCX and Newmont Mining (NEM) together account for virtually all copper mining in Indonesia and are exempt from export taxes under current contracts, but new rules hike to 25% a tax for copper concentrate exports and levy the tax on FCX and NEM for the first time; the tax would rise to 60% by the end of 2016 before exports of concentrate are banned from 2017.

The two miners are expected to meet finance ministry officials today.

Cowen is out cautious on FCX shares, citing the issues surrounding the Indonesia export license.