(April 12): Diversified miner Rio Tinto Plc said on Wednesday it was continuing talks on the long-term future of its stake in the Grasberg copper mine in Indonesia and one of its top executives would visit the country for talks over the coming weeks.
Mine operator Freeport McMoRan’s exports of copper concentrate from Grasberg, the world’s richest copper mine, have been at a standstill since mid-January, when Indonesia introduced rules intended to improve revenues from its resources and create jobs.
“There is no doubt that Grasberg is a world-class resource. However, there’s a difference between a world-class resource and a world-class business,” Rio Tinto Chief Executive Jean-Sebastien Jacques said on Wednesday, responding to a shareholder at the company’s annual general meeting in London.
“Depending what will happen in the coming months and years in terms of negotiations with the government, the extension beyond 2021, Rio will have to come to a conclusion whether we want to stay or not,” Jacques said, adding discussions involving all parties would continue over the next six months.
Rio Tinto has a joint-venture with Freeport-McMoRan Inc for the huge Grasberg copper and gold complex in remote Papua, with rights to 40 percent of production above specific levels until 2021 and 40 percent of all production after 2021.
As pressure mounts on Indonesia to agree a compromise US Vice President Mike Pence will visit the country next week and Arnaud Soirat, head of Rio Tinto’s copper and diamonds business, will visit shortly afterwards, Rio officials said.
Freeport McMoRan, the biggest publicly-listed copper miner, has lost US$1 billion since the export of copper concentrate from Grasberg was halted on Jan 12 under new rules issued by the government.
The Indonesian government has lost millions of dollars in royalties and is worried about layoffs and a slowing economy in the restive Papua region.
Shares in Rio Tinto were trading down about 3.5 percent at 1500 GMT on the London Stock Exchange.
Source: The Edge Markets