By Wilda Asmarini and Susan Taylor
JAKARTA/TORONTO (Reuters) - Freeport-McMoRan Inc (N:FCX) said on Friday an export ban remains in place on its copper mine in Indonesia, the world's second-biggest, because it has not yet reached agreement with the government on a new mining permit.
Government officials had earlier told reporters they issued a new mining permit to Freeport and the world's biggest publicly-listed copper miner could now apply for an export permit.
The southeast Asian country banned copper concentrate exports Jan. 12 to try and boost the local smelter industry. Freeport says the suspension will reduce output from its Grasberg mine by around 70 million pounds of copper per month.
Freeport shares were up 4.1 percent on Friday, after the company told Reuters there was no agreement, easing off an earlier 7.5 percent gain, as the government announcement signalled a possible end to the export suspension.
Phoenix, Arizona-based Freeport said it will continue to work with the government, but only agree to a new mining permit if it has the same fiscal and legal protection in its current contract, said spokesman Eric Kinneberg.
"These conditions are necessary and critical for (Freeport Indonesia's) long-term investment plans," he said in an email, adding that export restrictions contravene the company's legally-binding contract.
It is expected that terms of the new permit will require Freeport to pay taxes and royalties it was previously exempt from and divest up to 51 percent of its Indonesian unit, from 30 percent previously. To date, it has divested nearly 9.4 percent.
Last week, Freeport repeated a warning that it would have to slash Grasberg production and reduce its 30,000-plus work force if it did not get a new export permit by mid-February.
Rio Tinto (L:RIO) (AX:RIO), in a joint venture with Freeport in Indonesia since 1995, said Thursday that it was might exit its interest in Grasberg due to the uncertainties.
Freeport's new mining permit, signed by Indonesia's Energy and Mineral Resources Minister on Friday, would be valid until 2021, with an extension option, said Coal and Minerals Director General Bambang Gatot.
"Whether they agree or not, we'll see," Gatot said. "Whether there are incentives, we can work on this."
Freeport said last month the government had given "indications" it would allow the miner to resume exports while negotiating the new mining permit.
A similar permit was issued on Friday to Indonesian copper miner Amman Mineral Nusa Tenggara (JK:MEDC), which said it was awaiting more information.