[REPORT] Freeport-McMoRan and Indonesia Reach Agreement on MoU Contract
US miner Freeport-McMoRan Copper & Gold Inc. has agreed on a Memorandum of Understanding (MoU) with the Indonesian government over its contract renegotiations, a major step in resuming copper exports from the country.
The dispute between Freeport and Indonesia began when the country introduced a new export tax on Jan.12. The new tax is part of the government’s strategy to force miners to build smelters and processing plants in Indonesia.
"We received the report from the negotiating team who conveyed good news that Freeport have agreed," said chief economic minister Chairul Tanjung.
The draft MoU still needs to be approved by both the cabinent and outgoing President Susilo Bambang Yudhoyono.
"We are happy and expect it will be finalized with an MoU signing,” Tanjung said.
Freeport, which owns the Grasberg complex - the largest gold and copper mine in the world, has been seeking to secure a contract extension with Indonesia for the site beyond 2021.
Government officials for Indonesia have previously stated Freeport can only renew their 2021 deal in 2019 at the earliest, but it seems likely that the miner will be offered a different type of contract when its current deal ends.
Freeport isn’t the only one battling Indonesia over its new mining rule. The country’s top copper producer, Newmont Mining, has also been working on a resolution to the escalating export tax. The company claims the new law conflicts with the mining contract it originally signed.
Both companies have halted copper concentrate exports since January when the government introduced the surprise tax.
Freeport and Newmont Mining, which account for 97 percent of Indonesia’s copper output, have argued in the past they should be exempt from the tax.
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.