TORONTO (miningweekly.com) – The world’s biggest publicly traded copper producer Freeport-McMoRan Copper & Gold on Wednesday affirmed that it would "defend its rights" in Indonesia after the country imposed a new export tax, which the company said was in conflict with its contract with the government.

Freeport said it planned to defer production of about 40-million pounds of copper and 80 000 oz/m of gold until the Indonesian matter was resolved.

Freeport's Grasberg gold and copper complex is located in Papua, Indonesia, and the company's consolidated Indonesian operations contributed about 23% of its consolidated pre-tax income in 2012.

The Indonesian government had, however, given Freeport and fellow miner Newmont Mining a reprieve from a controversial mineral ore export ban, saying it would only apply to them from January 11, 2017, but then surprised the US-based majors by imposing a significant export tax.

Freeport's Indonesian unit, which runs the world's fifth-biggest copper mine, has warned that the planned export ban would cut the firm's revenues in the country by 65%, costing South East Asia's biggest economy $1.6-billion in lost revenue next year.

Newmont also said on Wednesday that it was considering legal action and other options in Indonesia, as a result of the new export tax. The miner said it was evaluating the impact of the tax on its Batu Hijau copper and gold mine.

EARNINGS REPORT

Freeport reported a 4.8% slide in fourth-quarter earnings, which were hammered by falling copper and gold prices.

Freeport's NYSE-listed shares pulled back by as much as $0.76 apiece to $34.50 during early morning trade.

Phoenix, Arizona-based Freeport reported that earnings in the three months ended December 31 were impacted on by net charges of $0.16 a share regarding negative hedging impacts, including other items.

Despite the lower realised copper and gold prices, revenue rose by 30% to $5.89-billion, up from $4.51-billion a year earlier and boosted by income from the company's recent oil and gas acquisitions.

The attributable net income to shareholders totalled $707-million, or $0.68 a share, compared with net income of $743-million, or $0.78 per share, for the same quarter in 2012. Net income for the year totalled $2.7-billion, or $2.64 a share, compared with $3-billion, or $3.19 a share, for the year 2012.

Freeport said it would cut spending and sought to sell assets to lower debt after copper and gold prices fell last year.

The average realised prices in the fourth-quarter were $3.31/lb for copper, compared with $3.60/lb for the same quarter in 2012, and $1 220/oz of gold, compared with $1 681/oz in the fourth quarter of 2012, and $92.68/bbl of oil, excluding the impacts of unrealised losses on oil and gas derivative contracts.

Freeport said it planned to spend about $7-billion in capital during 2014, including $3-billion for significant projects at its mining operations and another $3-billion at its oil and gas business. The company's capital spending in 2013 amounted to $5.3-billion.

"We are positive about our large and diverse portfolio of assets and resources, which provide attractive near-term and longer term growth opportunities,'' CEO Richard Adkerson said.

By midday, Freeport's shares were trading down 1.53% at $34.72 apiece.