Indonesia says Freeport agrees to cut output"This morning I received the news that there is a commitment from Freeport for an output reduction. The figure is not certain yet but it is likely to be by around 30,000 tonnes (of ore) daily," Susilo Bambang Yudhoyono told reporters.Indonesia has been pressing the huge mine deep in the mountains of the remote eastern province of Irian Jaya to cut output following an accident earlier this month at Freeport's Lake Wanagon waste dump which killed four workers and raised concerns about possible environmental damage.
Freeport has already been told to stop dumping waste at the Wanagon site.
Environment Minister Soni Keraf said he welcomed the planned output cut.
"I support their decision to cut back their production capacity in line with the environmental capacity," he told reporters. "By cutting down the output, half of the problems can be solved."
PT Freeport is majority owned by U.S.-based Freeport-McMoRan Copper & Gold Inc. The Indonesian government holds a stake, and Rio Tinto also has a share in the Grasberg mine, one of the largest copper and gold mines in the world.
Freeport-McMoRan said last month it expected sales from Indonesia to reach around 1.4 billion pounds of copper and 1.9 million ounces of gold this year.
Officials at PT Freeport were not immediately available for comment on Wednesday.
SHARES HIT BY UNCERTAINTY
Shares in Freeport-McMoran have been hit by the uncertainty surrounding its Indonesian operations. They closed at $10-1/16 on Tuesday in New York, down from above $21 at the start of the year.
Indonesia's government has been under pressure from some legislators to review PT Freeport's contract of work, last reviewed in 1991. But Yudhoyono has said if Freeport agreed to an output cut, there would be no need for a contract review.
The mine has been a focus of controversy for years. Some legislators say its current contract, drawn up during the rule of disgraced former President Suharto, is too favourable to Freeport and does not give enough royalties to the central and local government.
Activists in Irian Jaya, one of Indonesia's separatist hotspots, accuse Freeport of environmental damage, exploitation, and cultural insensitivity. Freeport insists it maintains the highest environmental and safety standards and respects and has helped preserve the local culture.
As demands mount from Indonesia's resource-rich provinces for a greater share of their natural wealth, Irian Jaya's provincial government has demanded a stake in the mine.
Analysts say it is extremely unlikely Indonesia would force a halt to production at Grasberg, as the mine generates considerable revenues for government coffers - it is the country's single largest taxpayer.
But they say last month's accident has given Jakarta an extra bargaining chip in its tussle to wring more concessions out of Freeport.