I suppose Freeport didn’t want to pay the extortion Indonesia requested of them. Nonetheless, this is going to hurt its stock, as Indonesia is hugely important to the companies prospects. Their mines are valued in the tens of billions there.
Indonesia has asked for a $530 million deposit toward building a new smelter in exchange for prolonging the permit, a request that Adkerson said this week was inconsistent with the company’s previous understanding with the government. Ariyono didn’t elaborate on the issue Thursday.
Energy and Mineral Resources Minister Sudirman Said told reporters on Wednesday that the government’s priority was to ensure operations continue so that the local economy is unaffected. He said the money would be proof of Freeport’s commitment to the smelter, as the government bids to reap more value from the nation’s mineral trove.
Freeport, which mined $2 billion of copper and $1.4 billion of gold in 2014 from Grasberg, also wants to extend its contract to operate in Indonesia. That expires in 2021, and the company has agreed to sell shares as part of the negotiation. An Indonesian official said this month that Freeport had offered the government an 11 percent stake in its local unit for $1.7 billion. Freeport confirmed an offer had been made though it didn’t give details.
This will likely be resolved soon. In the meantime, the stock is down, retracing some of yesterday’s gains.
