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Copper

The workers’ strike at the world’s largest copper mine, Chile’s Escondida, shows no signs of stopping. With unions this week rejecting a request by management for a new round of negotiations.

But elsewhere things are looking up for copper supply. With another of the world’s largest mines resuming operations.

That’s the Grasberg mega-mine run by Freeport McMoRan in Indonesia. Where the company said yesterday it has resumed copper production after a stoppage of over a month.

Officials with Freeport Indonesia told Reuters that Grasberg has begun a staged restart of operations. With production of copper concentrate expected to steadily rise as the mine gets back up and running.

That comes after Freeport shut down Grasberg copper concentrate output on February 11. A consequence of ongoing disputes between the company and the government of Indonesia over contract terms for operations here.

At the time, the government had been threatening to enforce a ban on exports of unfinished copper — a regulation that’s been an on-again, off-again issue for Indonesia miners since 2014.

The government eventually relented and granted Freeport approval to continue exporting copper concentrate. But another issue came up when government officials pressed Freeport to convert its current mining license to a different type of contract.

Currently, Freeport operates under a “contract of work” with the Indonesia government — a type of agreement that provides for protection of the company’s investments in the country.

But the government now wants Freeport to switch to a “special mining license” — a new form of contract officials have been pushing for all major operations across the country.

Freeport said it will not make the change, arguing that the new mining licenses do not guarantee investment security. The company even threatened to take Indonesia to international arbitration over the issue.

That standoff was largely what prompted Freeport to shut down Grasberg operations last month. Which makes this week’s restart very interesting, given there has been no announced resolution to the licensing disagreement.

Watch over the next several days to see if Freeport and the government have struck on deal on licenses. If so, the details will give a lot of clarity on the coming direction for miners across Indonesia.

Here’s to the reasons why.

By Dave Forest




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