Freeport McMoRan Inc has yet to pay a $530 million deposit for a new Indonesian smelter, which the government is demanding before renewing the U.S. company's export permit
for copper concentrate, a mines ministry official said on Tuesday.
Freeport, which has seen its stock plummet over 70 percent in the last three months as commodity markets plunge, could be forced to halt concentrate exports from its massive Grasberg copper and gold mine in the province of Papua if it fails to meet government obligations.
Freeport executives are expected to discuss the issue with the government on Tuesday.
"So far, there has been no update," Bambang Gatot Ariyono, director general of coal and minerals in the ministry, told Reuters. "We still don't know yet whether to ban (Freeport's exports) today or not."
A trade ministry official has said the U.S. company's export permit expires on Tuesday and that a six-month renewal would not be issued until the deposit was submitted.
Officials from Freeport, which later on Tuesday will announce its financial results for the last quarter of 2015, were not immediately available to comment.
A halt in exports would deal another blow to Freeport's profits, while denying the Indonesian government desperately needed revenue from one of the country's biggest taxpayers.
Freeport, under pressure from activist investor Carl Icahn, has struggled to reduce its $20.7 billion of debt and announced in October it would cut production globally.
Under normal conditions, Freeport Indonesia produces about 220,000 tonnes of copper ore per day, of which about a third usually goes to its domestic smelter at Gresik, with the rest exported as concentrate.
Any reduction in exports could help buoy copper prices that have dropped around 6 percent so far this year on worries over a global supply glut. London copper was trading at $4,440 a tonne in Asia on Tuesday, below Friday's two-week high of $4,484.
The $530 million deposit is intended to be a guarantee that the Phoenix, Arizona-based company will complete construction of another local smelter, which the government hopes will boost returns from its natural resources.
The amount would add to an estimated $80 million that Freeport set aside in July to obtain its current export permit.
"It is unlikely for Freeport to not pay that deposit, they certainly want to export so they will negotiate," said Helen Lau, analyst at Argonaut Securities in Hong Kong.
A prolonged interruption to the Papua mine would impact about 24,000 people working at Grasberg, which could lead to unrest in a region where Indonesia's government is trying to increase economic activity.http://www.reuters.com/article/indonesia-freeport-idUSL3N15A1B9