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Freeport says draft MoU agreed but not signed, no export timeframe set

  • Freeport McMoRan (FCX -0.4%) confirms its agreement to a draft memorandum with the Indonesian government on a contract renegotiation, but cautions that the memorandum has not yet been signed and there is no timeframe for any resumption of copper exports.
  • Under the draft MoU, government officials say FCX has agreed to divest 30% of its Indonesian unit, pay a royalty of 4% for copper sales and 3.75% for gold sales - up from 1% previously - and will build a smelter and pay the government a repayable bond.
  • The deal is due to be discussed at a cabinet meeting this week and finalized within two weeks, according to Indonesia's industry minister, but any contract agreement could still fail when a new government takes office in October.
  • While FCX uses the carrot approach, Newmont Mining (NEM -0.3%) uses the stick, idling its Indonesian operations as part of a potential exit strategy to reflect its smaller operations, which analysts say can't justify a stand-alone smelter.
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Comments (2)
  • james.
    , contributor
    Comments (1084) | Send Message
     
    The above article fails to mention the single most important thing concerning NEM vs Indonesia regarding the NEM Copper Mine there, and that is that NEM is taking the matter to International Arbitration where NEM is assured of winning based on their legal CoW signed in 1986; it is this CoW (Contract of Work) that gives NEM the legal authority to pay its workers only 20% of normal pay during this Force Majure legally declared by NEM when their storage bin of Copper Concentrates became full, and it is this CoW that stipulates taxation on profits of thier Indonesian Copper Mine which has been violated by the new law passed by the Indonesia Government in complete disregard for their existing CoW with NEM. NEM has enough Copper Concentrates stored in their bin to last until the end of 2014 as NEM continues to ship those Copper Contrates to the Indonesian Copper Refinery nearby, thus adding approximately $0.10 per share Profit to the NEM Q3 and also Q4 EPS figures for this year of 2014. July 8, 2014 at 10:22 a.m. PDT.
    8 Jul 2014, 01:23 PM Reply Like
  • txbadonetoo
    , contributor
    Comments (711) | Send Message
     
    Why would any company do business in Indonesia after this fiasco? This is nothing short of robbery.
    8 Jul 2014, 05:26 PM Reply Like
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