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Freeport readies first Grasberg copper exports after 15-week halt
April 26, 2017 / 11:38 AM / in 8 months

Freeport readies first Grasberg copper exports after 15-week halt

TOKYO/SEOUL/JAKARTA, April 26 (Reuters) - Freeport McMoRan Inc is preparing three copper concentrate export shipments from its giant Grasberg mine in Indonesia after a 15-week outage, sources with direct knowledge of the matter said.

Freeport is ramping up output and copper shipments from Grasberg, the world’s second-biggest copper mine, after obtaining an export permit on Friday that coincided with U.S. Vice President Mike Pence’s state visit.

These include shipments for customers in South Korea and Japan, the sources told Reuters. The restart of Grasberg shipments could mean freight savings for East Asian customers forced to buy from Chile while Indonesian exports were offline, one South Korean-based trade source said.

It takes “about 35 days” to ship from Chile, he said, more than three times longer than it takes to ship from Grasberg.

A shipping source in Japan said a vessel has loaded 22,000 tonnes of copper concentrate from Grasberg and is ready to leave for South Korea as early as later on Wednesday. Other ships may be headed to India and China, industry sources said.

A spokesman for Freeport Indonesia declined immediate comment on the matter.

Freeport is coordinating with customers who had made “other arrangements for supply when we were shut down for exports,” chief executive Richard Adkerson told an earnings conference call late on Tuesday.

There were “a series of ships, ones having loading completed as we speak,” he said, referring to 20,000-25,000-tonne vessels.

“We had close to 100,000 tonnes of copper concentrate at our portside ... so we’ll have a series of ships to reduce that inventory.”

Indonesia halted Freeport’s copper concentrate exports on Jan. 12 under rules requiring the world’s largest publicly listed copper miner to adopt a new mining permit, divest a 51 percent stake of its Indonesian unit, build a second smelter, relinquish arbitration rights and pay new taxes and royalties.

Adkerson said arbitration is still an option being considered by the Phoenix, Arizona-based company that has said it will only agree to a new permit with the same fiscal and legal protection in its current contract.

The stoppage has cost both sides hundreds of millions of dollars, and tensions have grown around Grasberg after Freeport laid off about 10 percent of its workforce of 32,000 and cut spending on underground expansion by one-third in an effort to stem its losses.

The company is now in talks with union leaders representing about one-third of its Indonesian workforce, Adkerson said, “in an effort to get them back to work.”

Union leaders warned last week that a one-month strike would commence on May 1, demanding an end to Freeport’s furlough policy.

According to the trade ministry, Freeport exported 1.17 million tonnes of copper concentrate to Japan, South Korea, China, India and the Philippines in 2016. (Reporting by Yuka Obayashi in Tokyo, Jane Chung in Seoul and Fergus Jensen in Jakarta; Additional reporting by Susan Taylor in Toronto; Writing by Fergus Jensen, editing by David Evans)

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