PHOENIX (Yosefardi) – Freeport-McMoRan Inc. (FCX) said its Indonesian operation, PT Freeport Indonesia (PT FI)’s revised plans incorporate improved operational efficiencies, reductions in input costs, supplies and contractor costs, foreign exchange impacts and a deferral of 15% of capital expenditures in 2016.

PT FI has several projects in progress in the Grasberg minerals district related to the development of its large-scale, long-lived, high-grade underground ore bodies. In aggregate, these underground ore bodies are expected to produce large-scale quantities of copper and gold following the transition from the Grasberg open pit, currently anticipated to occur in late 2017.

Development of the Grasberg Block Cave and Deep Mill Level Zone (DMLZ) underground mines is advancing. Production from the DMLZ commenced during September 2015, and the Grasberg Block Cave mine is anticipated to commence production in 2018.

Over the period from 2016 to 2019, estimated aggregate capital spending on these projects is currently expected to average $1.0 billion per year ($0.8 billion per year net to PT-FI).
PT FI has advanced discussions with the Indonesian government regarding its Contract of Work (COW) and long-term operating rights. The Indonesian government is currently developing economic stimulus measures, which include revisions to mining regulations, to promote economic and employment growth.

In consideration of PT FI’s major investments, and prior and ongoing commitments to increase benefits to Indonesia, including previously agreed higher royalties, domestic processing, divestment and local content, the Indonesian government provided a letter of assurance to PT FI in October 2015 indicating that it will approve the extension of operations beyond 2021, and provide the same rights and the same level of legal and fiscal certainty provided under its current COW.

PT FI is advancing plans for the construction of new smelter capacity in parallel with completing negotiations on its COW and long-term operating rights. PT FI has identified potential sites and is developing plans for the construction of additional smelter capacity. FCX is engaged in discussions with potential partners for the project.

As previously reported and upon completion of its amended COW, FCX and PT FI have agreed to a divestment to the Indonesian government and/or Indonesian nationals of up to a 30% interest (an additional 20.64%) in PT-FI at fair market value.