Export permit extension
Freeport-McMoRan (FCX) owns the Grasberg copper and gold mine in Indonesia (EIDO). Rio Tinto (RIO) is Freeport’s partner in this mine. RIO also owns the Oyo Tolgoi mine in Mongolia through its subsidiary Turquoise Hill Resources (TRQ).
According to a Reuters report, Indonesia’s mining ministry has recommended granting an export permit to Freeport until January 11, 2017. The current export permit expired on August 8. On previous occasions, Indonesia has extended the export permit for six months in one go. However, this time, the extension has been provided for five months.
Notably, the contract has been extended until January 2017. Indonesia plans to ban the export of unprocessed ores from the country starting in January 2017.
Indonesia is among the major copper producers globally. According to the International Copper Study Group (or ICSG), Indonesia was the 13th largest mined copper producer in 2014. Furthermore, the ICSG lists the Grasberg mine as the world’s second-largest copper mine by capacity on the basis of 2015 data. BHP Billiton’s (BHP) Escondida is the largest copper mine globally.
Why the fuss?
This is not the first time that Freeport-McMoRan’s Indonesia issues have been in the headlines. In this series, we’ll take a closer look at the issues Freeport has faced in Indonesia in the last three years. We’ll also see why the Grasberg mine is so crucial for Freeport.