Michael Taylor and Wilda Asmarini, Jakarta – Freeport-McMoran said exports of copper from its giant Indonesian mine have slowed to a trickle over the past month as it faces new rules on how buyers pay for metal, with the government showing no sign of handing it a second waiver.

Freeport, which is one of Indonesia's biggest tax payers, won a six-month exemption from new rules introduced this year making it compulsory for exports of coal, palm oil, oil and gas and minerals to be transacted through letters of credit issued by domestic banks.

The US miner said almost all exports of copper concentrate from its Grasberg mine had been halted since the exemption expired on July 25 and it was currently in talks with both its buyers and the Indonesian government.

"We are gradually working with our buyers to change their method of payment," Freeport Indonesia spokesman Riza Pratama told Reuters on Tuesday. "Hopefully we will get this matter resolved very soon. We are talking with the government so we can continue our exports."

International buyers and traders often pay Freeport directly or in advance, without going through the Indonesian banking system.

The dispute is the longest disruption to shipments since a seven-month stoppage last year when Indonesia imposed an escalating tax on metal concentrates.

Freeport exports about 60 percent of the estimated 2 million tonnes of concentrate produced each year at Grasberg, one of the world's biggest mines, while the rest is smelted locally into metal.

Mines Ministry Coal and Minerals Director General Bambang Gatot said any fresh exemption for Freeport would be decided by the trade ministry.

"Every company is supposed to comply with this regulation," he said, adding that Newmont Mining Corp, Indonesia's second largest copper miner, seemed to be complying with the new rules without problems.

Karyanto Suprih, acting director general for foreign trade at the trade ministry, told Reuters: "So far, there is no instruction to give an exemption on this LC obligation for mineral or coal exports."

Operations at Freeport's mine in remote Papua were running normally, Albar Sabang, a senior official at a Freeport union said late last week. Under normal conditions, Grasberg produces about 220,000 tonnes of copper ore per day, which is converted to copper concentrate.

Freeport's Pratama said the miner would need more space for stockpiling "very soon" but could not give a timeframe.

Rio Tinto has a joint venture with Freeport for a 40 per cent share of Grasberg's production above specific levels until 2021, and 40 per cent of all production after 2021.

(Reporting by Michael Taylor and Wilda Asmarini; Additional reporting by Bernadette Christina; Editing by Richard Pullin)

Source: http://www.reuters.com/article/2015/08/25/indonesia-freeport-idUSL3N10V2BI20150825