Freeport-McMoRan Inc (NYSE:FCX) has issued a notice that it might be forced to take legal action against the Indonesian government if an agreement is not reached about the mining dispute in Indonesia.
Freeport has given a 120-day warning and if the dispute will not be solved by then, it will then seek arbitration against the government of Indonesia. The case arose from a dispute revolving around a contract for a massive copper mine located in Papua province. The firm also announced that its subsidiary Freeport Indonesia which runs the Grasberg mine will start laying off workers as soon as this week.
Freeport plans to lay off more workers
Freeport’s main agenda is to make sure that the case is solved. Unfortunately, the dispute has been escalating, leading to the ultimatum from the mining company. The firm’s chief executive officer Richard Adkerson reported that the organization’s subsidiary in Indonesia laid-off some of its workers after the launch of the new permit negotiations in January. He also revealed that it plans to let go of more employees this week.
“We made our first layoffs. This week, as the next step, we will be releasing contract workers,” the CEO revealed.
The Indonesian government is seeking more from the contract
Freeport’s dispute centers on the company’s 30-year mining contract and it also comes around the same time that the Indonesian government has been trying to get a bigger piece of the mining industry. It plans to do this through the more regulations especially on ore processing and foreign ownership. Unfortunately, the mining company was forced to put its mining practices in the Papua province mine on hold due to the dispute.
“At the end of that period if this dispute is not resolved we reserve the right … to commence arbitration. I sincerely hope we can find a compromise,” Adkerson stated.
The negotiations have already led to a negative impact especially due to the job losses as well as the impact on the company stock performance.
Freeport stock closed the latest trading session at $14.91.