[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.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.