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Freeport McMoRan Announces Further Reduction and Suspension of Common Stock Dividend

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James R. Moffett, FCX’s Chairman of the Board - Supplied

James R. Moffett, FCX’s Chairman of the Board – Supplied

Jayapura, Jubi – Freeport-McMoRan Inc. (NYSE: FCX) today (9/12/2015) announced additional actions in response to market conditions, including further revisions to its oil and gas capital spending plans, additional curtailments in copper and molybdenum production and the suspension of its common stock dividend.

Oil & Gas Review. As previously reported on August 5, 2015, Freeport-McMoRan Oil & Gas (FM O&G) is deferring investments in several long-term projects in response to oil and gas market conditions. Following an ongoing review, capital expenditures for 2016 and 2017 have been reduced further from $2.0 billion per year in 2016 and 2017 to $1.8 billion in 2016 and $1.2 billion in 2017, including idle rig costs. The revised plans, together with initiatives to obtain third party financing or other strategic alternatives, will be pursued with the goal of achieving funding for oil and gas capital spending within its cash flows and resources.

The revised plans incorporate a reduction in rig utilization from three Deepwater Gulf of Mexico drillships to one drillship while increasing production from third quarter 2015 rates of 150 barrels of oil equivalents per day (MBOE/d) to an average of 159 MBOE/d in 2016 and 2017. FM O&G expects to bring eight wells on line in late 2015 and 2016 from its successful tie back drilling operations at the Holstein Deep, Horn Mountain and King Projects in the Deepwater Gulf of Mexico. These projects, combined with other initiatives, are expected to add low cost oil production, enabling cash production costs to decline from $19 per barrel of oil equivalents (BOE) in 2015 to less than $16 per BOE in 2016 and 2017. Under the revised plans, FM O&G’s cash flows would substantially fund its capital expenditures at $45 per barrel of Brent crude oil in 2017.

FM O&G is engaged in ongoing discussions with its rig vendors and other service providers to obtain reductions in costs and to evaluate opportunities to market idled equipment to third parties.

As previously reported on October 6, 2015, the FCX Board is engaged in a strategic review of its oil and gas business to evaluate alternative courses of action designed to improve FCX’s financial position, enhance value to FCX shareholders and achieve self-funding of its oil and gas business from its cash flows and resources. FM O&G’s high quality asset base, its substantial underutilized Deepwater Gulf of Mexico infrastructure, its large inventory of low risk development opportunities and its talented and experienced personnel and management team provide alternatives to generate value.

Mining Review

Freeport-McMoRan Inc NYSE: FCX - Dec 9, 2015 6:55 PM EST

Freeport-McMoRan Inc
NYSE: FCX – Dec 9, 2015 6:55 PM EST

FCX continues to review its capital projects and costs to maximize cash flow in a weak commodity price environment and to preserve its resources for anticipated improved future market conditions. FCX previously announced a 25 percent reduction in its capital spending for its mining business for 2016 (from $2.7 billion to $2.0 billion, including $0.6 billion in sustaining capital) and announced curtailments at its North America and South America mines totaling 250 million pounds of copper and 20 million pounds of molybdenum per year. FCX is undertaking further actions involving plans for a full shut-down of its Sierrita mine in Arizona and adjustments to its operating plans from its primary molybdenum mines, which will increase its curtailments to approximately 350 million pounds of copper and 34 million pounds of molybdenum per annum. FCX is continuing to evaluate its mining operating plans in response to market conditions and will make further adjustments as required.

FCX is also evaluating other financing alternatives, the potential sale of minority interests in certain mining assets and other actions to provide additional proceeds for debt reduction. FCX has a broad set of natural resource assets that provide alternatives for future actions to enhance its financial flexibility.

Dividend on Common Stock. FCX also announced today that its Board has suspended its annual common stock dividend of $0.20 per share. This action will provide cash savings of approximately $240 million per annum and further enhance FCX’s liquidity during this period of weak market conditions. FCX’s Board will review its financial policy on an ongoing basis and authorize cash returns to shareholders as market conditions improve.

Assuming prices of $2.00 per pound for copper and $45 per barrel Brent crude oil for 2016, FCX estimates consolidated operating cash flow would exceed capital expenditures by more than $600 million.

James R. Moffett, FCX’s Chairman of the Board and Richard C. Adkerson, Vice Chairman, President and Chief Executive Officer said, “We are taking further actions to strengthen our financial position during a period of weak and uncertain market conditions. While copper prices have weakened in recent weeks and the near-term copper outlook is uncertain, we view the medium and longer term outlook positively, supported by copper’s important role in the global economy and limitations on global supplies. As we approach 2016, we are positioning the company for free cash flow generation in a weak commodity price environment and remain focused on actions to reduce debt. Our high quality portfolio of long-lived assets, flexible operating structure and experienced management team provide a solid base to address the current market conditions while maintaining an attractive portfolio of assets positioned for long-term success.”

Equity Transactions

Since commencing its $2 billion at-the-market equity programs in August 2015, FCX has sold a total of 154.6 million shares of common stock, generating gross proceeds of $1.6 billion through December 4, 2015. Approximately $0.4 billion remains available under the programs. As of December 4, 2015, FCX had 1.19 billion common shares outstanding.

Freeport's workers at mining site in Timika - energytoday.com

Freeport’s workers at mining site in Timika – energytoday.com

Amendment to Bank Credit Facility. Following recent declines in prices for its primary products, FCX has reached agreement with its bank group to amend the Leverage Ratio (Net Debt/EBITDA) under its $4 billion revolving credit facility and term loan from the previous limit of 4.75x to 5.5x at December 31, 2015, 5.9x for the first half of 2016, and stepping down to 5.0x by year-end 2016 and 4.25x in 2017. The Leverage Ratio is unchanged at 3.75x thereafter.

FCX is a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. FCX is the world’s largest publicly traded copper producer.

FCX’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America; the Tenke Fungurume minerals district in the DRC; and significant U.S. oil and natural gas assets in the Deepwater GOM, onshore and offshore California and in the Haynesville natural gas shale, and a position in the Inboard Lower Tertiary/Cretaceous natural gas trend onshore in South Louisiana.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements, which are all statements other than statements of historical facts, such as expectations relating to commodity prices, development and production activities, production volumes, ability to repay debt, statements regarding the review of strategic alternatives for FCX’s oil and gas business, including the previously announced potential public offering of a minority interest in FCX’s oil and gas business, a potential spinoff of FCX’s oil and gas business to its shareholders, potential joint venture arrangements, and potential further spending reductions, future dividend payments, debt reduction and share purchases and sales. The declaration of dividends is at the discretion of the Board and will depend on our financial results, cash requirements, future prospects, and other factors deemed relevant by the Board.

FCX cautions readers that forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause FCX’s actual results to differ materially from those anticipated in the forward-looking statements include supply of and demand for, and prices of, copper, gold, molybdenum, cobalt, crude oil and natural gas, mine sequencing, production rates, drilling results, potential effects of cost and capital expenditure reductions and production curtailments on financial results and cash flow, the outcome of FCX’s strategic review of its oil and gas business, potential additional oil and gas property impairment charges, potential inventory adjustments, potential impairment of long-lived mining assets, the outcome of ongoing discussions with the Indonesian government regarding PT Freeport Indonesia’s (PT-FI) Contract of Work, PT-FI’s ability to obtain renewal of its export license after January 28, 2016, the potential effects of violence in Indonesia, the resolution of administrative disputes in the Democratic Republic of Congo, industry risks, regulatory changes, political risks, weather- and climate-related risks, labor relations, environmental risks, litigation results and other factors described in more detail in Part I, Item 1A. “Risk Factors” of FCX’s annual report on Form 10-K for the year ended December 31, 2014, as updated by FCX’s subsequent filings with the Securities and Exchange Commission.

Investors are cautioned that many of the assumptions on which FCX’s forward-looking statements are based are likely to change after the forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs, some aspects of which FCX may not be able to control. Further, FCX may make changes to its business plans that could affect its results. FCX cautions investors that it does not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in FCX’s assumptions, changes in business plans, actual experience or other changes, and FCX undertakes no obligation to update any forward-looking statements. (Victor Mambor)

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Indonesia’s political system has ‘failed’ its minorities – like West Papuans

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Human Rights Watch researcher Andreas Harsono … violent repression has “created unnecessary paranoia and racism among Indonesian migrants in West Papua”. Image: HRW

By David Robie

A human rights defender and researcher has warned in a new book published on the eve of the Indonesian national elections tomorrow that the centralised political system has failed many of the country’s 264 million people – especially minorities and those at the margins, such as in West Papua.

Author Andreas Harsono also says a “radical change is needed in the mindset of political leaders” and he is not optimistic for such changes after the election.

Harsono is author of Race, Islam and Power: Ethnic and Religious Violence in Post-Suharto Indonesia, a book based on 15 years of research and travel between Sabang in Aceh in the west and Merauke in West Papua in the East.

Founding President Sukarno used the slogan “from Sabang to Merauke” when launching a campaign – ultimately successful – to seize West Papua in 1961.

But, as Harsono points out, the expression should really be from Rondo Island (an unpopulated islet) to Sota (a remote border post on the Papua New Guinean boundary.

Harsono, a former journalist and Human Rights Watch researcher since 2008, argues that Indonesia might have been more successful by creating a federation rather than a highly centralised state controlled from Jakarta.

“Violence on post-Suharto Indonesia, from Aceh to West Papua, from Kalimantan to the Moluccas, is evidence that Java-centric nationalism is unable to distribute power fairly in an imagined Indonesia,” he says. “It has created unnecessary paranoia and racism among Indonesian migrants in West Papua.

‘They’re Melanesians’

“The Papuans simply reacted by saying they’re Melanesians – not Indonesians. They keep questioning the manipulation of the United Nations-sponsored Act of Free Choice in 1969.”

Critics and cynics have long dismissed what they see as a deeply flawed process involving only 1025 voters selected by the Indonesian military as the “Act of No Choice”.

Harsono’s criticisms have been borne out by a range of Indonesian activist and watchdog groups, who say the generals behind the two presidential frontrunners are ridden with political interests.

The Commission for Missing Persons and Victims of Violence (Kontras) and the Mining Advocacy Network (JATAM) have again warned that both presidential candidate tickets — incumbent President Joko “Jokowi” Widodo and running mate Ma’ruf Amin as well as rival Prabowo Subianto and Sandiaga Uno — have close ties with retired TNI (Indonesian military) generals.

These retired officers are beholden to political interests and the prospect of resolving past human rights violations will “become increasingly bleak” no matter who is elected as the next president.

Kontras noted that nine out of the 27 retired officers who are behind Widodo and Ma’ruf have a “problematic track record on human rights”.

“Likewise with Prabowo Subianto and Sandiaga Uno where there are eight retired officers who were allegedly involved in past cases of HAM violations”, said Kontras researcher Rivanlee Anandar.

Prabowo himself, a former special forces commander, is implicated in many human rights abuses. He has been accused of abduction and torture of 23 pro-democracy activists in the late 1990s and he is regarded as having knowledge of the killing hundreds of civilians in Santa Cruz massacre in Timor-Leste.

90,000 killed post-Sukarno

Harsono’s 280-page book, with seven chapters devoted to regions of Indonesia, documents an ”internally complex and riven nation” with an estimated 90,000 people having been killed in the decade after Suharto’s departure.

“In East Timor, President Suharto’s successor B. J. Habibie agreed to have a referendum [on independence]. Indonesia lost and it generated a bloodbath,” says Harsono.

“Habibie’s predecessors, Megawati Sukanoputri and Susilo Bambang Yudhoyono, refused to admit [that] the Indonesian military’s occupation, despite a United Nations’ finding, had killed 183,000 people between 1975 and 1999.”

Harsono notes how in 1945 Indonesia’s “non-Javanese founders Mohammad Hatta, Sam Ratu Langie and Johannes Latuharhary wanted an Indonesia that was democratic and decentralised. They advocated a federation.”

However, Sukarno, Supomo and Mohammad Yamin wanted instead a centralised unitarian state.

“Understanding the urgency to fight incoming Dutch troops, Latuharhary accepted Supomo’s proposal but suggested the new republic hold a referendum as soon as it became independent. Sukarno agreed but this decision has never been executed.”

The establishment of a unitarian state “naturally created the Centre”, says Harsono. “Jakarta has been accumulated and controlling political, cultural, educational, economic, informational and ideological power.

Java benefits

“The closer a region to Jakarta, the better it will benefit from the Centre. Java is the closest to the Centre.

“The further a region is from the Centre, the more neglected it will be. West Papua, Aceh, East Timor and the Moluccas are among those furthest away from Jakarta.”

The centralised political system needed a “long and complex bureaucracy” and this “naturally created corruption”, Harsono explains.

“Indonesia is frequently ranked as the most corrupt country in Asia. Political and Economic Risk Consultancy Ltd listed Indonesia as the most corrupt country in Asia in 2005.”

Harsono also notes how centralised power has helped a religious and ethnic majority that sees itself as “justified to have privileges and to rule over the minorities”.

The author cites the poet Leon Agasta as saying, “They’re the two most dangerous words in Indonesia: Islam and Java.” Muslim majority and Javanese dominance.

Harsono regards the Indonesian government’s response to demands for West Papuan “self-determination” as “primarily military and repressive: viewing Papuan ‘separatists’ as criminals, traitors and enemies of the Republic of Indonesia”.

He describes this policy as a “recipe for ongoing military operations to search for and destroy Papuan ‘separatists’, a term that could be applied to a large, if not overwhelming, portion of the Papuan population”.

Ruthless Indonesian military

 

“The Indonesian military, having lost their previous power bases in east Timor and Aceh, ruthlessly maintain their control over West Papua, both as a power base and as considerable source of revenue.

“The Indonesian military involvement in legal businesses, such as mining and logging, and allegedly, illegal businesses, such as alcohol, prostitution, extortion and wildlife smuggling, provide significant funds for the military as an organisation and also for individual officers.”

Pro-independence leaders have called on West Papuans to boycott the Indonesian elections tomorrow.

Andreas Harsono launched his journalism career as a reporter for the Bangkok-based Nation and the Kuala Lumpur-based Star newspapers. In the 1990s, he helped establish Indonesia’s Alliance of Independent Journalists (AJI) – then an illegal group under the Suharto regime, and today the most progressive journalists union in the republic.

Harsono was also founder of the Jakarta-based Institute for the Studies on the Free Flow of Information and of the South East Asia Press Alliance (SEAPA).

In a separate emailed interview with me in response to a question about whether there was light at the end of the tunnel, Harsono replied: I do not want to sound pessimistic but visiting dozens of sites of mass violence, seeing survivors and families’ who lost their lost ones, I just realised that mass killings took place all over Indonesia.

“It’s not only about the 1965 massacres –despite them being the biggest of all– but also the Papuans, the Timorese, the Acehnese, the Madurese etc.

“Basically all major islands in Indonesia, from Sumatra to Papua, have witnessed huge violence and none of them have been professionally understood. The truth of those mass killings have not been found yet.” (asiapacificreport.nz)

Professor David Robie is director of the Pacific Media Centre.

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TAPOL and ETAN seek judicial review of 1969 ‘self-determination’ Papua vote

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“West Papuans refer to the 1969 referendum as the ‘Act of No Choice’. The referendum was by no means a legitimate exercise of self-determination. Image: Benny Wenda FB

Papua, Jubi – TAPOL and the East Timor and Indonesia Action Network (ETAN) have applied for a judicial review of the “Act of Free Choice” by the Indonesian Constitutional Court.

Recently filed by human rights lawyers on behalf of West Papua customary leaders and churches, the submission states that the highly contested self-determination “referendum” held in 1969 must be deemed contrary to the rights granted under Indonesian constitution, including the rights to freedom of thought and conscience, right to life, right to feel safe, and the right to not be tortured.

The “Act of Free Choice” took place between July 14 and August 2, 1969.

It was implemented following the guidelines of the New York Agreement (Agreement Between the Republic of Indonesia and the Kingdom of the Netherlands Concerning West New Guinea (West Irian [West Papua])of August 16, 1962.

The New York Agreement set the terms of the self-determination process. The UN was to assist Indonesia in overseeing an exercise of free choice by the people of West Papua on their political status, choosing between independence or remaining under Indonesian control.

There was to be full participation by all adults in accordance with best international practice. However, there was no meaningful support from the United Nations to guarantee a freely-held vote.

Instead, note TAPOL and ETAN in their joint statement, Indonesia took control of the process and backed by threats from its military, hand-picked 1025 men and women and forced them to vote for annexation by Indonesia.

Strategic litigation

It is why West Papuans refer to the referendum as “Act of No Choice”. The referendum was by no means a legitimate exercise of self-determination.

“This strategic litigation reminds the international community about the root cause of the long-running conflict in West Papua,” the joint statement said.

“The right to self-determination is an erga omnes norm which means that every State has the obligation to ensure that everyone’s right to self-determination is fulfilled.

“This 50 years of injustice has cost the loss of hundreds of thousands of indigenous West Papuan lives.

“West Papuans today still suffer persecution for expressing their rights to self-determination. We encourage the Indonesian government to accept the submission and to acknowledge that the vote staged in 1969 was contrary to rights granted under the Indonesian Constitution.”

TAPOL and ETAN believe that the right to self-determination is fundamental and that the people of West Papua have not yet been given the freedom to exercise that right.

Both TAPOL and ETAN note that each organisation works to promote human rights, justice and democracy in Indonesia and Timor-Leste.

“We join West Papuans in calling for an internationally-supervised referendum conducted according to international standards,” the joint statement said. (asiapacificreport.nz)

 

Source: Pacific Media Centre Newsdesk

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West Papuans call for mass boycott of Indonesian elections

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Exiled West Papuan leader Benny Wenda on a visit to New Zealand’s Pacific Media Centre at Auckland University of Technology in 2013. Image: Del Abcede/PMC

By Tom Stayner of SBS News

A West Papuan independence leader and Nobel peace prize nominee is calling for a mass boycott of Indonesia’s upcoming elections to bring attention to their independence struggle.

Benny Wenda was granted political asylum in the United Kingdom 16 years ago – following an escape from custody while on trial in West Papua.

In exile, he has led the campaign for the self-determination that his countrymen say they have lacked since Indonesia gained internationally-recognised control of West Papua through a disputed referendum vote 50 years ago.

Wenda told SBS News from London, that he is calling for a mass boycott of Indonesia’s upcoming elections to again bring attention to a decades long independence struggle.

“This is a critical time for our people because the election for a colonial occupied force is not legitimate,” Wenda said.

“FROM NOW ON WE WILL NOT TAKE PART IN INDONESIAN ELECTIONS BECAUSE WE ARE NOT INDONESIAN.”

“We are Melanesian. We are the Pacific islanders… People are fed up – enough is enough,” he said.

Indonesian elections

On April 17 – more than 190 million registered Indonesian voters will go to the polls for presidential and general elections.

Favoured incumbent President Joko Widodo is being challenged by former military general Prabowo Subianto.

Subianto is also the son-in-law of long-time former President Suharto – who led Indonesia for three decades.

Southeast Asia analyst Damien Kingsbury said both candidates have adopted “nationalist” sentiments in their campaign so far.

“There are both populists that are operating on a populist agenda,” he said.

“Jokowi is trying to broaden his appeal out to the middle ground of Indonesian voters. Prabowo is appealing much more to a base.”

Professor Kingsbury said despite making up some recent ground, Subianto is well behind President Widodo in most polling.

“The polls have been showing that Jokowi is running at around the 50 percent mark in terms of popularity,” he said.

“Prabowo is running at around the 30 percent mark with a significant number of undecided voters.”

This is the second time the two rivals will face off after President Widodo defeated Subianto in elections five years ago.

According to the West Papua National Committee, hundreds of thousands of West Papuans boycotted those elections in 2014.

West Papuan militants back boycott

Indonesia’s control of West Papua has long been a flash-point for ongoing low level conflict between Indonesian forces and Indigenous Papuan militants.

Indonesia recently deployed 600 soldiers to protect the building of a major highway in West Papua, in response to the killings of 19 Indonesian road workers. The road project was a signature promise that President Joko Widodo made to the region.

In following clashes with militants, Indonesia’s military said three of its soldiers were killed along with up to 10 rebels.

But despite this escalation, Professor Kingsbury said West Papua had essentially been a “non-issue” in the election campaign.

“Both candidates believe that that Melanesian West Papuans should accept they are Indonesian,” he said.

“[They believe] the separatist movement [in West Papua] is essentially a criminal organisation.”

In a statement seen by SBS News, the West Papua Liberation Army (TPNPB-OPM) declared its intention to support the push to boycott 2019 elections.

“The TPNPB-OPM never recognised the existence of the Colonial Government of the Republic of Indonesia in Papuans Customary Lands,” the statement reads. (asiapacificreport.nz)

 

Source: asiapacificreport.nz

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