LONDON (Reuters) - Freeport-McMoRan is preparing to ship as much as 900,000 metric tons of copper concentrate starting in June from its Grasberg mine after positive talks with Indonesia to extend its export licence, two sources with knowledge of the situation said.

An Indonesian minister urged the government last week to allow the U.S. copper giant to keep shipping copper concentrate from the mine it operates at Grasberg in Indonesia after its current licence expires at the end of May.

Exports of copper concentrate, produced from crushing mined ore, in the second half would help smelters facing shortages.

Copper prices hit two-year highs at $10,208 a ton last week, a gain of more than 20% so far this year, driven in part by major Chinese smelters planning to cut output after disruptions to mine, supply such as those at First Quantum's Cobre mine in Panama.

Freeport is talking to customers about selling Grasberg output in the second half this year, according to three sources, reflecting the company's confidence the government will allow continued exports.

Initial commercial discussions on sales of Grasberg output were held in Santiago, Chile, on the sidelines of an industry conference in mid-April, two of the sources said.

Freeport did not respond to requests for comment via email and phone.

The sources asked not to be named because they were not authorised to speak to the media.


Indonesia banned raw material exports in 2020 to try to force companies to refine minerals in the country, adding value to its exports. Miners have had to apply for export quotas when their smelters and refineries are under construction.

Freeport has said that banning exports of Grasberg concentrates output could lead to a loss of $2 billion in revenues for Jakarta.

The company's Manyar smelter is due to be completed this month, but it may take up to six months to reach full capacity, meaning it will not be able to process all of the concentrate produced by Grasberg, the world's second largest active copper mine.

The amount of concentrate available for export could amount to between 500,000 to 900,000 tons from June until about November, the sources said.

Freeport was allowed to export 1.7 million tons of concentrate from Indonesia between late July 2023 and when the export licence ends in May, it said in a filing last year.

The release of Grasberg's output could cause an increase in treatment charges (TC), fees paid by miners to smelters for converting raw materials into metal. Miners typically can negotiate lower prices when traders and smelters have to compete for concentrate because supplies are low.

The copper concentrate market is expected to be in deficit for the next three years.

Last week, TCs, also a tracker of mined copper availability, turned negative. According to price rating agency Fastmarkets, treatment charges turned negative in April for the first time since 2013.

That compares with annual 2024 benchmark TCs settled between Chinese smelters and Antofagasta at $80 per ton.

The latest Reuters' poll showed analysts see a copper deficit of 125,000 tons in 2024, more than triple the deficit of 35,000 tons expected in the January poll and compared with a surplus of 302,500 tons expected late last year.

(This story has been corrected to say Grasberg copper concentrate, not Grasberg copper, in the headline)

(Reporting by Julian Luk and Pratima Desai; writing by Eric Onstad; editing by Veronica Brown and Barbara Lewis)

By Julian Luk and Pratima Desai