Freeport-McMoRan had announced these plans for Grasberg prior to the latest developments.

Indonesian government regulations passed in January and February require that PT-FI terminate its COW and convert to a special license (IUPK) in order to export its concentrate production. PT-FI advised the government that attempts to enforce this regulation on PT-FI violates its COW and that it is unwilling to terminate its COW unless replaced by a mutually acceptable form of agreement providing fiscal and legal assurances to support its long-term investment plans in Indonesia.

PT-FI’s assets includes one of the world’s largest copper and gold deposits at the Grasberg minerals district in Papua, Indonesia.

As a result, PT-FI has been unable to export concentrates and is proceeding with its plan to suspend investments in Papua, reduce its production by approximately 60% and implement cost savings plans involving significant reductions in its workforce and spending levels with local suppliers.

“Despite extensive efforts to reach an agreement with the government, we have been unsuccessful in achieving a resolution that would avoid the negative impacts for all stakeholders, especially for our workforce and the local economy,” said Richard C. Adkerson, FCX president and CEO. “We are simply asking the government to honor our legally binding contract.”

PT-FI’s first quarter production has been adversely impacted by the suspension of concentrate exports and a temporary outage since January 19 at PT Smelting. PT Smelting has advised PT-FI that it expects to resume operations in March. Assuming resumption of PT Smelting’s operations in March and a continuation of the ban on exports, FCX estimates its first quarter sales will be reduced, resulting in deferrals of approximately 170 million lb and 270,000 ounces (oz), representing a reduction of approximately 17% for copper and 59% for gold of its consolidated first quarter sales.

For each month of delay in obtaining approval to export, PT-FI’s share of production is projected to be reduced by approximately 70 million lb of copper and 70,000 oz of gold.