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Indonesia to temporarily exempt Freeport from some new mining rules: official

By Wilda Asmarini

JAKARTA (Reuters) - Indonesia will temporarily exempt the local unit of Freeport-McMoRan Inc from some new rules while processing its application for new mining rights, a ministry official said, potentially allowing for the resumption of copper concentrate exports.

Freeport <FCX.N> has warned that the halt to its shipments since the new mining rules took effect on Jan. 12 could lead to a sharp drop in output at its Grasberg mine.

"While their special mining license is not definitive, we cannot apply (these rules) fully," coal and minerals director general Bambang Gatot told Reuters on Tuesday, when asked about the fiscal and other requirements of Freeport's special mining license.

It was not immediately clear which of the new rules, which require Freeport to pay more taxes and divest a 51 percent stake, the company would be temporarily exempted from.

Mining Minister Ignasius Jonan said on Monday Freeport could be issued with a temporary permit within one or two days while the government decides on the company's application for a new special mining license.

A temporary permit would also allow Freeport to resume concentrate exports, he said.

At a media discussion last week, Jonan said Freeport would need to convert its contract of work to a new special mining license before being allowed to resume exports, as part of Indonesia's push to develop domestic industries under the new rules.

A spokesman for Freeport Indonesia on Tuesday said the company would only adopt the new mining rules after obtaining "a stability agreement providing the same rights and the same level of legal and fiscal certainty provided under its contract of work."

"(Freeport) has requested that concentrate exports be permitted while the new license and stability agreement are negotiated," he said.

Under its current contract, Freeport "is not required to pay export duties on concentrate or to conduct further divestments," Freeport Indonesia spokesman Riza Pratama said.

Freeport is one of Indonesia's biggest taxpayers, paying more than $16 billion in taxes, royalties, dividends and other payments between 1992 and 2015, according to company data.

Freeport is also involved in a dispute over $469 million in water taxes and penalties in Papua province dating back to 2011, and has argued that it should not be subjected to any taxes that are not specified in its 1991 contract.

Fellow Indonesian copper miner Amman Mineral Nusa Tenggara, a unit of PT Medco Energi Internasional <MEDC.JK>, said it had applied for new mining rights last week.

(This version of the story corrects name of mining company in last paragraph to Amman Mineral Nusa Tenggara from Amman Mineral Nusantara)

(Reporting by Wilda Asmarini; Writing by Fergus Jensen; Editing by Randy Fabi)

 

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