Officials of  Phoenix based Freeport McMoRan have provided an update of their negotiations with the  Indonesian government regarding the company’s long term operating rights at  its huge Grasberg copper mine there which is the second largest in the world with more than 32,000 employees

In a statement released Tuesday, August 29,  Freeport  said it and the government of Indonesia have reached an agreement on the company’s long term investment plan of the Grasberg.

This framework of the agreement  will require definitive documentation and approval of Freeport McMoRan’s Board of Directors and its partners of the following key.terms::

Freeport McMoRan, Inc  will convert its Contract of Work with the Indonesia government to a Special License which will provide the company with  long-term operating rights of the Grasberg through  year 2041.  The government  will provide certainty of fiscal and legal terms during the term of the Special License

Freeport McMoRan will commit to constructing a new smelter in Indonesia within 5 years.  Freeport McMoRan will agree to divest its ownership in the Grasberg copper and gold mine at fair market value so that the government of Indonesia will own 51 percent interest . 

The timing and process of divestment is being discussed with officials of the Indonesia government . The divestment will be structured so that Freeport McMoRan, Inc will continue to retain control over operations and governance  of the Grasberg operations

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Richard C. Adkerson, President and Chief Executive Officer of Freeport McMoRan, Inc , said: “We are pleased to announce an agreed framework to support our ongoing operations and investment program in the country of Indonesia.. Reaching this understanding on the structure of a mutual agreement is significant and positive for all stakeholders. Important work remains on documenting this agreement and we are committed to completing the documentation as soon as possible during this year.”