SUPPLY NEWS - Freeport can't export copper from Indonesia after Feb 20 - source

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Perrine Fayeperrine.faye@fastmarkets.comDeputy Editor-in-Chief; Head of Physical+44 (0) 20 7337 2140

London 01/02/2016 - Freeport-McMoRan's subsidiary in Indonesia, PT Freeport Indonesia, will not be allowed to export copper concentrates from its Grasberg mine from February 20 because it has yet to secure a new export licence, FastMarkets learned on Monday.

"They don't have the permit yet and don't have exports scheduled post February 20," a well-informed source said.

FastMarkets had incorrectly reported that Freeport had secured a new licence on January 21 amid confusion in the market, with some of Freeport's customers believing the issue to have been resolved.

But the Indonesian government has in fact not yet renewed Freeport's rolling six-month export permit and is demanding more evidence that the construction project for a new smelter in the country is progressing well, the source explained.

Until it gets the export licence, PT Freeport will continue to produce concentrates from its Grasberg mine and stock up until shipments can resume, the source added.

Freeport has yet to respond to requests for comment. The miner submitted a new application for a six-month permit in January 28, 2016.

Local reports have quoted Indonesian government officials as saying PT Freeport had requested a permit to export one million tonnes of copper concentrates, having shipped about 500,000 tonnes in the last six months, below its quota of 775,000 tonnes

PF Freeport had been asked to pay a $530 million deposit for a new Indonesian smelter to get its export permit renewed, according to some reports, while others said Freeport-McMoRan had offered the government the option to buy a stake in PF Freeport for $1.7 billion.

Indonesia currently enhances a flat ban on the export of unprocessed minerals from the country but Freeport has been given a rolling six-month export permit since 2014 after committing to build a second smelter in the country close to Grasik, in which it holds a 25-percent stake.

But the granting of the permit has been delayed several times in the past amid disagreements between the government and Freeport, which has been asking for an extension of its contract of work beyond 2021.

The company is a major exporter of copper concentrates from its Grasberg mine to smelters in Japan, South Korea, India and China.


(Editing by Mark Shaw)



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