Freeport-McMoRan Successful Completion Of Transaction With Indonesia Government

PHOENIX, AZ - Freeport-McMoRan Inc. reported the completion of its transaction with the Indonesian government regarding PT Freeport Indonesia’s (PT-FI) long-term mining rights and share ownership. FCX expects its share of future cash flows of the expanded PT-FI asset base, combined with the cash proceeds received in the transaction, to be comparable to its share of anticipated future cash flows under PT-FI’s previous Contract of Work and joint venture arrangements with Rio Tinto (Joint Venture).

Richard C. Adkerson, Vice Chairman of the Board, President and Chief Executive Officer, said, "The completion of this transaction reflects the culmination of a multi-year process to accomplish a 'win/win' outcome for all parties. This landmark event establishes the beginning of a new long-term partnership between FCX and the Republic of Indonesia. Under the leadership of President Joko Widodo and the Ministry of Energy and Mineral Resources, the Ministry of Finance, the Ministry of Environment and Forestry, the Ministry of State Owned Enterprises and BKPM (Indonesia’s Investment Board), and with support from the provincial and regional governments, we have developed a new structure that will bring greater benefits to the people of Indonesia while providing investment certainty for FCX’s major investments in Indonesia.

"Both FCX and the Government of Indonesia take pride in what we have accomplished together at the Grasberg operation in Papua, which has been developed into one of the world’s largest copper and gold mining assets. We look forward to a future of enhanced long-term stability for PT-FI’s operations, the continued application of best practices for environmental management and to providing greater benefits to the people of Papua, to the Republic of Indonesia and to local employees, suppliers and contractors while generating attractive returns for our shareholders."

The Government of Indonesia has granted PT-FI a new special mining license (IUPK) to replace PT-FI’s Contract of Work, enabling PT-FI to conduct operations in the Grasberg minerals district through 2041. Under the terms of the IUPK, PT-FI has been granted an extension of mining rights through 2031, with rights to extend mining rights through 2041 subject to PT-FI completing the construction of a new smelter and fulfilling its defined fiscal obligations to the Indonesian government.

PT-FI has committed to construct a new smelter in Indonesia within five years of the closing of today’s transaction. PT-FI is initiating front-end engineering and design and intends to pursue financing, commercial and potential partner arrangements for this project. The economics for PT-FI’s share of the new smelter will be borne by PT-FI’s shareholders according to their respective ownership percentages.

The fiscal terms are set forth for the term of the IUPK through 2041. The key fiscal terms include a 25 percent corporate income tax rate, a 10 percent profits tax on net income and royalties of 4 percent for copper and 3.75 percent for gold.

PT-FI and Indonesia’s Ministry of Environment and Forestry (the MOEF) have established a new framework for continuous improvement, including initiatives that PT-FI will pursue to increase tailings retention and to evaluate large-scale beneficial uses of tailings within Indonesia. The MOEF has issued a new decree that incorporates various initiatives and studies to be completed by PT-FI that would target continuous improvement in a manner that would not impose new technical risks or significant long-term costs to PT-FI’s operations. The new framework enables PT-FI to maintain compliance with site-specific standards and provides for ongoing monitoring by the MOEF.

The company’s address is 333 N. Central Ave., Phoenix, AZ 85004, (602) 366-8100, https://fcx.com.