Freeport-McMoRan Still Waiting for Copper Export Permit Approval

Top copper producer Freeport-McMoRan (NYSE:FCX) is still awaiting Indonesia’s decision on the renewal of its copper concentrate export permit, due to expire on Friday (February 16).

Under the current regulations, Freeport, which operates Grasberg, the world’s second-largest copper mine, has to reapply for an export license every year. But extensions are only granted once previous permits have expired.

Last year, the Phoenix-based producer obtained a quota to export 1.1 million tonnes of concentrate. This year, the company has applied for almost the same volume.

Indonesia’s mining ministry is “still evaluating” the application and will not issue a recommendation on Thursday (February 15), said Bambang Gatot, director general of coal and minerals.

However, any delay in approval is “unlikely to impact shipments from Freeport’s Grasberg mine,” he said. If the government doesn’t give the green light before the permit expires, exports will “not stop,” as shipments don’t happen every day, Gatot added.

In order to receive an export recommendation, companies have to keep smelter development timelines.

Last year, disruptions at Grasberg due to a smelter strike and issues surrounding the renewal of Freeport’s mining permit held up exports for several weeks.

In addition, Freeport had completed just over 2 percent of a long-promised second copper smelter in Indonesia, Bambang Susigit, minerals director at the mining ministry said last week.

Even so, the government is expected to consider Freeport’s progress in other areas before granting or denying a permit approval.

The company’s 2018 work plans were approved last week, said Riza Pratama, a spokesman for Freeport Indonesia. “We hope [the export renewal is] smooth and there’s no delay,” Pratama told Reuters.

In January, Freeport reported better-than-expected quarterly earnings, supported by higher copper prices and productivity gains. Earlier in February, the company reinstated a quarterly dividend, which was suspended for three years, on the back of a stronger market forecast.

“We’re focused on getting this Indonesian thing resolved and recognize that until we do, that’s going to be a factor for credit ratings, stock valuation,” Chief Executive Richard Adkerson said at the time in a statement.

On Thursday (February 15), shares of Freeport closed down 0.83 percent, at US$19.02, in New York. The company’s share price has remained almost neutral year-to-date.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.