Freeport asks Indonesia to cut or postpone $530 mln smelter bond: mining minister

JAKARTA: Freeport McMoRan Inc has asked Indonesia to reduce a $530 million smelter bond the local unit of the U.S. copper mining giant must set aside before receiving an extension of its export permit, Indonesia's mining minister said on Tuesday.

Freeport's 6-month copper concentrate export permit expired last week amid a deadlock over the bond, which Indonesia has requested as a guarantee that the miner will complete construction of another local smelter.

"They have appealed to ask whether we can postpone it or give them a discount, but we asked them to show their commitment in another equivalent way," Energy and Mines Minister Sudirman Said told reporters, referring to an exchange of letters with the Phoenix, Arizona-based company.

Freeport, which runs one of the world's biggest copper mines in Indonesia's easternmost province of Papua, usually produces about 220,000 tonnes of copper ore a day. A prolonged stoppage in shipments would hit the company's profits and deny Jakarta desperately needed revenue from one of its biggest taxpayers.

Indonesia wants the deposit as a guarantee that the mining giant will complete construction of another local smelter. The amount would add to an estimated $80 million Freeport set aside in July 2015 to obtain its just-expired export permit.

Freeport Indonesia could not be reached for comment on Tuesday. The U.S. miner wants to invest $18 billion to expand its operations at Grasberg, but is seeking government assurances that its right to mine at Grasberg will be extended.

Its current contract - which gives it the right to work and develop the Grasberg complex - expires in 2021. By Indonesian law, this contract cannot be extended until 2019 at the soonest.

A memorandum of understanding agreed in July 2014 between the government and Freeport, which ended a seven-month export stoppage and outlined a timetable for a contract extension and smelter construction, had now expired, Said said.

An agreement that would maintain operations and investment preparations ahead of contract renewal talks in 2019, was a way to resolve the current problems, he said.