February 3, 2017 / 3:18 PM / in a year

UPDATE 2-Freeport warns of Indonesian cuts if export approval delayed

(Adds stock price, anode export issue, background)

By Susan Taylor

TORONTO, Feb 3 (Reuters) - Freeport-McMoRan Inc, the world’s biggest public-listed copper miner, said on Friday it will need to cut staff and development spending in Indonesia if the government there continues to delay export approval of its copper concentrates.

The Phoenix-based miner said it has the right to export copper concentrate from its Grasberg mine without restriction or export duties under its current contract, and was considering alternatives to enforce its rights.

Freeport said it continues to work with the Indonesian government to resolve the issue. Exports of its copper concentrate were halted Jan. 12, when a ban on shipping semi-processed ore out of the Southeast Asian country came into effect to boost the local smelter industry.

Freeport shares dropped nearly 2.9 percent in early trade on Friday to $16.33. Last week, the stock shed nearly 6 percent after the company reported disappointing financial results and cut its 2017 copper and gold production forecast.

For every month that it awaits export approval, Freeport said its share of production will be reduced by about 70 million pounds of copper and 70,000 ounces of gold.

Bolstering a warning it made last week, Freeport said if the export delay continues, it would need to make “near-term” production cuts to match capacity at its smelter, which processes about 40 percent of its concentrate production.

The company said it also would need to “significantly adjust its cost structure,” reduce staffing, investments on underground development projects and a new smelter, and spending with suppliers.

Delays for another new export license, for anode slimes required in smelter operations, could further hurt operations, Freeport said.

To gain a new special mining license, Freeport must agree to pay taxes and royalties that it is currently exempt from and divest up to 51 percent of its Indonesian unit, up from 30 percent under current rules. To date, it has divested only 9.36 percent. (Reporting by Susan Taylor; Editing by Bernadette Baum)

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