TEMPO.CO, Phoenix - The share price of US-based Freeport-McMoRan (FCX.N) slumped on Wednesday, January 25, at the New York Stock Exchange. Freeport's price fell 5.8 percent to US$16.04 a share.
Freeport, the parent company of Freeport Indonesia—a copper and gold miner operating in Papua, was hit by sentiments after it lost a lawsuit against the Papuan government, which followed Indonesia's export ban of raw minerals.
Freeport reported that its earnings fell by US$0.25 per share, well below analysts' estimate of US$0.34 "mostly due to lower output from Grasberg," CEO Richard Adkerson told Reuters on Wednesday.
Adkerson said Freeport might have to cut production at Grasberg to about 40 percent of capacity if they don't get an export extension for copper concentrate—a plan that was notified to the Indonesian government.
Freeport also plans to slash jobs in mid-February for the same reason. "The company has limited the supply of copper concentrates," he said.
Adkerson said the company needs to reduce operating costs and delay billions of dollars-worth of investment plans in underground projects and a second copper smelter in Indonesia.
Freeport claims to have received indications from the government that it would be allowed to resume exports after changing its contract of work (COW) status to special mining license (IUPK).
Freeport has stopped all export of copper concentrates from Indonesia since January 12, causing global supplies to drop more than two percent. Jefferies' analyst Christopher LaFemina said the export ban has actually helped copper prices to reach a two-month high of US$5.973 per ton on Wednesday.
Last week, Freeport lost its Rp2.1 trillion lawsuit against the Papua provincial government. The court battle that started in December 2015, the surface water tax dispute ended with the panel of judges ruling against Freeport on January 18.
Freeport's appeal was rejected and the judges ruled in favor of Papua Governor's decision to dismiss Freeport's objection. The court also declared that the tax assessment of drinking water is valid and enforceable by law.
"The dispute's total claim value is Rp2.5 trillion for the tax period of 2011-2014 and January to July 2015," The Papua government said in a written statement.
REUTERS | ABDUL MALIK
