Freeport-McMoRan (FCX) and the government of Indonesia have reached an understanding on a framework to support PT Freeport Indonesia’s (PT-FI) long-term investment plans in Papua. PT-FI will convert its Contract of Work to a special license (IUPK), which will provide the company with long-term operating rights through 2041. PT-FI will commit to construct a new smelter in Indonesia within five years. In return, the government of Indonesia will provide certainty of fiscal and legal terms during the term of the IUPK.
“Reaching this understanding on the structure of a mutual agreement is significant and positive for all stakeholders,” said Richard C. Adkerson, president and CEO. “Important work remains on documenting this agreement and we are committed to completing the documentation as soon as possible during 2017.”
Freeport will also agree to divest its ownership in PT-FI at fair market value so that Indonesia interests own 51% of PT-FI’s shares. The timing and process of the divestment is being discussed with the government, but it will be structured so that FCX will retain control over operations and governance of PT-FI. This framework still requires definitive documentation and approval from the Freeport Board of Directors and partners.