Friday, February 10, 2006

Indonesia seeks revised Freeport-McMoRan profit-sharing deal

JAKARTA (MarketWatch) -- Soaring mineral prices on the global market justify a revision of the government's profit-sharing agreement with U.S. mining giant Freeport-McMoRan Copper & Gold Inc. (FCX), Indonesia's Vice President Jusuf Kalla said Friday.

"Prices of gold and nickel are currently high, (and) based on this, profit sharing should be increased by two-to-three times from the previous figures," Kalla told reporters, without elaborating on the terms of the government's current profit sharing deal.

Kalla said his desire to gain a bigger slice of the profits from Freeport-McMoRan's massive Grasberg mine in remote Papua province was motivated by concern for Papuan residents rather a bid to boost desperately-needed government revenues.

"This is for the sake of Papuan people, because 70% of profit sharing (from Freeport-McMoRan's operations) will be given to the Papuan people," he said, without elaborating.

A Freeport-McMoRan spokesperson could not immediately be reached for comment.

Kalla said the government would seek to review the contracts of large foreign investment projects, including Freeport-McMoRan's Grasberg, every five years, without elaborating.

Copper and gold prices on the world market hit record highs earlier this month as fund managers entered the market en masse as a result of strong demand expectations from the Asian economic powerhouses of China and India.
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