Negotiations between Freeport-McMoRan Copper & Gold and the Indonesiangovernment over an extension of the company's work contract in the countryhave yet to be resolved, CEO Richard Adkerson said Thursday.
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"We have had productive discussions, but the process has not beenorganized in a way that has led to a conclusion yet," Adkerson said in aconference call with investors and analysts to discuss the company'sfirst-quarter results.
"I will say that we have made progress in finding mutually acceptableground on a number of the issues," he said. "We're going to continue to workto get this done as quickly as possible, recognizing the challenge of gettingdecisions made the closer we get to the elections."
Freeport-McMoRan hopes to extend the expiration date of its existingwork contract from 2021 to 2041. But Indonesian presidential elections arescheduled for mid-2014, and some analysts worry that a new government may beless inclined to grant an extension.
"There is expected to be a continuity in the way the country operatesand deals with investors like ourselves," Adkerson said.
Freeport-McMoRan owns 90% of the Grasberg copper-gold mining complex,considered to be the second largest copper mine in the world.
Meanwhile, Freeport-McMoRan's labor contract in Indonesia is set toexpire in September. Under Indonesian law, labor agreements must be ratifiedevery two years.
Adkerson said formal negotiations with labor leaders were set to beginMay 1. "Union leaders, community leaders and others are all mentioning thegoal of avoiding a strike this year, and that is certainly our objective," hesaid.
ADKERSON PLAYS DOWN DRC FEARS
In the Democratic Republic of Congo, Adkerson said he did not believethe company was being targeted by calls for legislation that would halt exports of raw materials from the country.
Some lawmakers and government officials have called for legislationprohibiting the export of raw materials in an effort to encourage thedevelopment of more value-added industries in the country.
"Some people are exporting ores; they're just mining the ore and sendingit to other countries for smelting," Adkerson noted. "A lot of the ores weregoing to Zambia, and in Indonesia, you saw nickel and tin ores going toJapan, and the countries are saying 'We want processing facilities in ourcountry.'"
Freeport-McMoRan owns 56% of the Tenke Fungurume copper-cobalt mine inthe mineral-rich Katanga Province. The mine produces 250 million lb of coppera year. Canada's Lundin Mining owns 24% of the complex, while state-ownedminer Gecamines owns 20%.
Through a solvent-extraction/electrowinning process, Tenke Fungurumeproduces copper cathode, which is traded on global exchanges, as well ascobalt hydroxide, an intermediate product.
Because of its partnership with Gecamines, Freeport-McMoRan "is verycomfortable that we are not the target of these types of restrictions becauseof what we're doing," he said.
Nor has the DRC government tried to tie labor-related issues at TenkeFungurume with the push for value-added industry creation, Adkerson said. "Wehave great relationships with the workforce, and when they have issues werespond to them," he said.
"We haven't seen any attempts to try and tie [in] labor relations withgovernment policy issues," Adkerson said. "The provincial government andcentral government have been very supportive."
--Nick Jonson, email@example.com
--Edited by Keiron Greenhalgh, firstname.lastname@example.org