Freeport-McMoRan’s standoff with Indonesia over the giant Grasberg copper and gold mine is entering a new phase, as the company scales back operations while trying to force a resolution to the dispute.
Last month, the US miner threatened to take Indonesia to arbitration, saying new rules the country imposed on miners in January violated the terms of an operating agreement struck in 1991 that runs to 2021.
The rules are part of a broad effort to gather more revenue from the mining sector. Under the rules, Freeport is banned from exporting a form of unrefined copper until it agrees to new operating rights that would eventually force it to cede control of Grasberg, the second-largest copper mine in the world, to Indonesian entities.
With the two sides at loggerheads, the miner lowered its output target for Grasberg, shelved investment plans and began laying off workers.
The showdown has reached a critical juncture. A prolonged standoff would be a financial blow to Freeport, which derives about one-third of its copper output from Indonesia. The mine is readjusting its operations to 40 per cent of its normal capacity.
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