It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Monday, September 29, 2025
GREENWASHING
Why Advertisers Are Returning to Big Oil Despite Net-Zero Pledges
Advertising firms are following banks in retreating from net-zero commitments, prioritizing business with Big Oil.
Financial realities and AI disruption are pushing agencies to secure reliable, high-paying clients in the energy sector.
The shift highlights a growing gap between climate pledges and industry survival strategies.
Like financial services, advertising and marketing have been at the forefront of the net-zero push, making emission reduction commitments and demonstrating a readiness to pressure the energy industry to decarbonize. Also, like financial services, ad and marketing firms are backpedaling from net zero and eager to get Big Oil’s business.
The Financial Times reported this week that advertisers are going the way of bankers in rephrasing their decarbonization messaging on websites and rediscovering the energy industry as a client - a well-paying one. The standard go-to explanation is, of course, President Trump and his anti-net-zero rhetoric and policies. Yet it seems that a much bigger reason for the pullback is simply money. Like banks before them, advertisers and marketers are discovering that the energy industry makes money and doesn’t mind paying generously for advertising.
The FT cited data from a climate campaign organization called Clean Creatives showing that advertising and PR agencies had boosted the number of contracts with their energy industry clients over the past 12 months. The trend strongly suggests a developing realization that net-zero campaigning is all very well, but it does not really pay the bills. Had it been otherwise, the ad industry—and bankers—would have stopped doing any business with Big Oil.
What actually happened was that banks started pulling out of net-zero organizations. It is a fact that the Trump administration had a lot to do with it, as did Republican state governments before Trump became president. The saga began back in 2022, when Texas passed legislation forbidding state agencies from investing in any of a number of companies that, the state’s government said, boycotted the oil and gas industry. The black list of such companies included many Wall Street heavyweights eager to get a piece of the energy transition business.
Other states also slammed banks and asset managers for their newfound investment pickiness and took measures similar to Texas. Banks and asset managers rushed to defend themselves—even as they continued insisting on their net-zero commitments that inevitably involved a reduction and a following exit from oil and gas. Only it never came to that.
The “reality is that for quite some time, fossil fuels will be with us,” the chief executive of Barclays told Bloomberg last year, even though the bank had made a pledge to completely suspend financing for oil and gas projects—but only new ones. The financial industry, CS Venkatakrishnan said at the time, “cannot go cold turkey” on hydrocarbons.
The pushback against what banks called sustainable investing did a lot to change their perspective on the energy transition—and their fiduciary duty, which is to make money for their clients, not force them to cut their emissions. Now, advertisers are following the same path for pretty much the same reasons. Banks have discovered that investments in emission-reduction, carbon credits, and what transition proponents call climate tech do not pay as well as expected and, indeed, in some cases, it does not pay at all. Now, advertisers are discovering that artificial intelligence is encroaching on their territory and they need paying clients.
According to the FT report—and the Clean Creatives outlet—the ad industry’s rediscovery of the importance of making money has led to a change in marketing messaging for the energy industry that, the report implies, is inconsistent with net zero efforts. “Marketing spend is shifting towards making them seem [oil and gas] inevitable and vital,” the executive director of Duncan Meisel told the FT.
It is a fact that net-zero pundits resent the notion that oil and gas are indeed inevitable and vital for modern human civilization. In fact, some of those pundits acknowledge this, especially those involved in electricity generation. Every winter, the northern hemisphere gets a reminder of just how indispensable hydrocarbons are for securing power and heating once the wind dies down and the sun moves past its peak power generation period.
Ultimately, however, it is about survival. “Advertising is struggling — so all business is being considered,” one industry insider told the Financial Times. AI is turning into a substantial challenge for advertisers and marketers, threatening to render the industry unnecessary. “AI is going to make all the world’s expertise available to everybody at extremely low cost,” Mark Read, the former head of WPP, said earlier this year. “The best lawyer, the best psychologist, the best radiologist, the best accountant, and indeed, the best advertising creatives and marketing people often will be an AI, you know, will be driven by AI.”
In response to that challenge, the ad industry is, first, finding ways to use AI itself, and, two, securing all the business it can secure to ensure its longer-term survival. It so happens that oil and gas majors have the money, and companies such as Ørsted don’t have the money, because oil and gas are indeed inevitable and vital and will remain so until such energy technology is developed that has all the pros of hydrocarbons with none of their drawbacks.
By Irina Slav for Oilprice.com
BP Invests in New $5 Billion U.S. Gulf Oil Project
BP has reached the final investment decision on its estimated $5 billion Tiber-Guadalupe project in the U.S. Gulf of Mexico, as part of its strategy to grow upstream production and boost its U.S. output to more than 1 million barrels of oil equivalent per day by 2030.
Tiber-Guadalupe, 100%-owned by the UK-based supermajor, will be BP’s seventh operated oil and gas production hub in the Gulf of America, featuring a new floating production platform with the capacity to produce 80,000 barrels of crude oil per day.
Production from the project is expected to start in 2030 and is one of the 8-10 major projects that BP plans to start up globally between 2028 and 2030.
The estimated $5 billion Tiber-Guadalupe project is fully accommodated within BP prudent financial framework, which the supermajor geared toward the upstream business earlier this year in a major strategy reset to slash investments in renewables and focus on its core business of producing oil and gas.
Under the new strategy, BP will aim for 10 new major upstream projects to start up by the end of 2027, and a further 8–10 projects by the end of 2030. Production is also expected to grow to 2.3–2.5 million barrels of oil equivalent per day (boed) in 2030, with capacity to increase to 2035.
In the United States, together with its 100%-owned Kaskida project, BP expects to invest around $10 billion to deliver its Gulf of America Paleogene projects.
Tiber-Guadalupe and Kaskida will help BP to boost its capacity to produce more than 400,000 barrels of oil equivalent per day (boepd) from the U.S. offshore region by 2030. The major aims to increase its offshore and onshore production in the United States to more than 1 million barrels of oil equivalent per day by 2030.
“Along with its sister project Kaskida, Tiber-Guadalupe will play a critical role in bp’s focus on delivering secure and reliable energy the world needs today and tomorrow,” said Andy Krieger, BP’s senior vice president, Gulf of America and Canada.
Just last week, BP said that global oil demand is set to rise through 2030 amid weaker-than-expected efficiency gains. In its 2025 Energy Outlook, BP ditched its forecast from last year that oil demand could peak as soon as this year.
Porsche AG's shares fell almost 10% after the company scaled back its electric-vehicle ambitions, leading to a €1.8 billion hit to operating profit and its fourth profit warning this year.
The carmaker has scrapped plans for a battery-powered luxury SUV and will instead expand its lineup of combustion-engine and hybrid cars, reflecting a wider struggle in the German auto sector with weak demand for luxury EVs, especially in China.
The crisis has led to calls for CEO Oliver Blume, who leads both Porsche and Volkswagen, to step aside from his role at Porsche as both companies cut their earnings outlooks and restructure to cut costs.
Porsche AG shares fell almost 10% last week—the steepest drop since its 2022 debut—after the carmaker scaled back its electric-vehicle ambitions. The stock is down nearly 30% this year and will fall out of Germany’s benchmark DAX index. Parent company Volkswagen also slid 8.4%, its sharpest drop in more than two years, according to Bloomberg.
The 911 maker scrapped plans for a battery-powered luxury SUV and will instead expand its lineup of combustion-engine and hybrid cars. The shift triggered a €1.8 billion hit to operating profit, Porsche’s fourth profit warning this year, and pushed both Porsche and VW to cut their earnings outlooks. VW also flagged a €3 billion impairment tied to the move, lowering its forecast for operating return on sales to just 2% to 3%, down from as much as 5%.
Bloomberg writes that auto buyers “are putting little value on luxury electric cars,” said Matthias Schmidt, an independent analyst near Hamburg. “Porsche has now realized this and is jumping back into high-margin combustion-engine models.”
The setback underscores the wider struggles of Germany’s auto sector. Porsche faces weak demand in China, where local champion BYD dominates EVs, and has been hit hard by U.S. tariffs in its largest market. Luxury spending is muted, and analysts say Porsche has disappointed investors since its blockbuster listing. “Porsche has now been disappointing investors for over two years,” Citi’s Harald Hendrikse wrote. “It is hard to conclude that these disappointments have now completed.”
Volkswagen, once an EV frontrunner, is also scaling back battery plans and restructuring to cut costs. While VW outsold Tesla, Stellantis and BYD in Europe this year with several affordable EVs, its premium brands—Audi, Bentley, Lamborghini and Ducati—have weakened, with shipments falling across major markets.
Porsche has already replaced executives, scrapped its in-house battery program, and announced job cuts to reduce costs. But the crisis is fueling calls for CEO Oliver Blume—who leads both Porsche and VW—to step aside from running Porsche so a new leader can attempt a turnaround.
Microreactors offer portable, autonomous nuclear power for towns, campuses, industry, and military bases, with lower upfront costs than traditional plants.
Despite their promise, investors remain wary due to a costly “chicken-and-egg” problem: factories need orders before production, but buyers want proven technology first.
Studies warn that small reactors may generate more nuclear waste than expected, raising challenges for public acceptance and long-term energy policy.
Are microreactors the future of nuclear energy? Someday, nuclear reactors the size of shipping containers could power your hometown, but a huge number of regulatory hurdles will have to be cleared before nuclear power starts popping up in your backyard – and public buy-in will be critical.
After decades of relatively little change in nuclear power technology, there is currently a flurry of nuclear energy innovation taking place around the world. Scientists are looking into how to make nuclear power production more efficient, cost-effective, safe, and streamlined in response to an ever-growing need for reliable and carbon-free energy production. Like renewable energies, nuclear power is carbon-free, but unlike solar and wind power, the production potential of nuclear power is steady and constant, making it an attractive option for energy security in the decarbonization era.
Some of the potential new nuclear technologies garnering investor attention are small reactors and microreactors. In recent years nuclear energy development has been trending toward much smaller models in the interest of lowering up-front development costs and making new nuclear projects more easily deployable.
Most of the excitement and investment has been geared toward small modular reactors (SMRs), which many advocates believe could be the backbone of a nuclear renaissance in the United States and other countries that have begun to move away from nuclear power production. These modular models can be mass-produced in a factory setting and installed on-site alone or in clusters to create utility-scale nuclear power plants more quickly and cheaply than traditional large-scale models.
Microreactors, which have so far received less attention and funding support than SMRs, are much smaller. While a full-scale nuclear power plant would produce, on average, upward of 700 megawatts, and an individual SMR would produce about 300 megawatts, a microreactor’s output would be around 10 megawatts.
While microreactors are much smaller, they could be used to power entire towns for a relatively low up-front cost, and they have unique selling points compared to SMRs and traditional nuclear power plants. They’re safer than larger models, and they’re so small that they could be brought in on a truck or barge, hugely easing the installation process. Plus, microreactors do not require any on-site workers for their operation and maintenance, and can be operated remotely and autonomously.
“Microreactors have the ability to provide clean energy and have passive safety features, which decrease the risk of radioactive releases,” Euro News reported earlier this year. “They are also much cheaper than bigger plants as they are factory-built and then installed where they are needed in modules.”
All of these benefits mean that microreactors could be enormously useful in a wide range of contexts. A recent article in The Conversation touts their utility, saying that “this technology could benefit college campuses, remote communities in Alaska primarily powered by oil and diesel, tech companies looking for reliable electricity for AI data centers, companies in need of high-temperature heat for manufacturing and industrial processes, mining operations that need a clean energy source and even military bases in search of a secure source of energy.”
The problem is that while the microreactors themselves would be relatively low-cost, building the facilities to construct these microreactors would be a massive and expensive undertaking. And so far no one has been willing to take that risk. Investors want guaranteed orders before they build such a factory, and potential buyers want to see the technology built, tested, and proven before they place an order. “It’s a catch-22,” says The Conversation’s Aditi Verma.
There’s another considerable downside to widespread deployment of microreactors and small modular reactors – surprisingly large amounts of nuclear waste. A Stanford study found that “most small modular reactor designs will actually increase the volume of nuclear waste in need of management and disposal, by factors of 2 to 30,” said lead author Lindsay Krall. “These findings stand in sharp contrast to the cost and waste reduction benefits that advocates have claimed for advanced nuclear technologies.”
Community buy-in is essential to get microreactors off the ground, but those communities need to seriously consider the cost of managing all that nuclear waste. The many benefits of microreactors may still be worth it, but nuclear waste is a major cost to taxpayers that should not be overlooked.
By Haley Zaremba for Oilprice.com
Why the World Can’t Easily Wean Itself Off Russian Nuclear Fuel
Russia supplies roughly 40% of the world’s enriched uranium, leaving the EU and other nations dependent despite efforts to diversify.
Global uranium demand is projected to rise nearly 75% by 2040, but production from existing mines is expected to halve, creating a severe supply gap.
The U.S., U.K., and Europe are investing in domestic uranium mining and enrichment capacity, but new projects face high costs, regulatory hurdles, and long lead times.
As the dominant producer of enriched uranium, Russia became the world’s main supplier of the fuel needed to power nuclear energy projects, as many countries find it difficult to decrease their dependency on Moscow for the fuel. Russia supplies around 40 percent of the world’s enriched uranium, followed by China (17 percent), France (12 percent), the U.S. (11 percent), the Netherlands (8 percent), the U.K. (7 percent), and Germany (6 percent). Shifting dependence away from Russia has been very difficult, as alternative supplies simply do not exist in the way they do for other energy sources, such as oil and gas.
In June, the European Commission said it did not plan to impose limits on the EU’s import of Russian enriched uranium alongside a proposal on the potential ban of Russian gas imports by the end of 2027. After initially saying that it would introduce trade measures targeting enriched uranium, the EU energy commissioner Dan Jorgensen said, “That will also come, but in the first stage, we’ll be focusing on the gas.” He added, “The question about nuclear is, of course, complicated, because we need to be very sure that we are not putting countries in a situation where they do not have the security of supply. So, we’re working as fast as we can to also make that a part of the proposal.”
In 2023, Russia continued to supply 38 percent of the EU’s enriched uranium and 23 percent of its raw uranium, according to the think-tank Bruegel. The EU spent around $1.18 billion on Russian nuclear fuel in 2024, according to EC estimates. Meanwhile, five EU countries – Bulgaria, the Czech Republic, Finland, Hungary and Slovakia – all have Russian-designed reactors that were developed to run on Russian fuel. All except Hungary have now signed deals to use alternative suppliers, although the shift away from Russian uranium is expected to take several years.
Meanwhile, the global demand for enriched uranium is expected to grow significantly in the coming decades as several countries invest in a new era of nuclear expansion. A report published by the World Nuclear Association (WNA) in September said that the global demand for uranium is expected to increase by almost a third to around 86,000 tonnes by 2030 and to rise to 150,000 tonnes by 2040. However, to meet this demand while decreasing reliance on Russian uranium, several countries will need to invest in accelerated permitting, mining innovations, and new exploration for uranium.
The report showed that uranium production from existing mines is expected to halve between 2030 and 2040, resulting in a significant supply gap. As many countries around the globe begin to invest in new nuclear reactors, as well as alternative projects such as small modular reactors (SMRs), there will simply not be enough fuel to power these operations if greater efforts are not made to finance new uranium operations.
Kazakhstan is currently the world-leader in uranium production, now contributing 40 percent of the global supply, of which the country owns around half. Meanwhile, Russia continues to dominate the world’s enrichment capacity. The world’s uranium market is seeing annual growth of between one to two percent, according to estimates. Boris Schucht, the CEO of uranium enrichment firm Urenco, said, “It’s a small, growing market. It’s a limited market, [that’s] not very big, and it’s very expensive to develop technologies in this market. So that makes the market pretty complex.”
The Dutch-British-German consortium decided to terminate all its existing Russian contracts in 2022 and now aims to increase its capacity of Low Enriched Uranium (LEU) by 1.8 million Separative Work Units across its four sites in Eunice, New Mexico, the Netherlands, Germany, and the U.K. This is one of many companies looking to start to increase their LEU supply to meet the growing global demand.
The U.S. has ramped up efforts to mine uranium in recent years, increasing production from 22,680 kg in 2023 to 307,082 kg in 2024. It commenced large-scale exploration drilling activities in 2024, in a bid to reduce reliance on Russia, drilling 1,324 holes. Under the Biden administration, the U.S. Department of Energy worked to expand domestic commercial LEU. Before leaving office, in December, Biden announced the selection of six companies from which it can sign contracts to procure LEU to incentivise the development of new uranium production capacity in the United States.
Meanwhile, in 2024, the U.K. said it would be the first European nation to produce advanced nuclear fuel, with plans to develop Europe’s first high-assay low-enriched uranium (HALEU) facility. The U.K. government awarded $267.1 million to Urenco to develop the enrichment facility, which is expected to start producing fuel in 2031, and will be ready for domestic use and export within the next decade.
The global demand for enriched uranium is expected to grow significantly in the coming decades in response to a nuclear revival in several countries. However, producing the uranium needed to fuel a new nuclear era will be extremely complex, due to the strict sectoral regulations and the current limited global production capacity. Greater funding must be invested in research and development, as well as into new production facilities around the globe to support the world’s nuclear energy aims.
By Felicity Bradstock for Oilprice.com
The Nuclear Company partners with Nucor to boost US nuclear power supply
The Nuclear Company said on Friday that it has signed a strategic agreement with US steelmaker Nucor Corporation to boost the country’s nuclear power supply chain and support domestic manufacturing.
TNC, a US nuclear deployment company, said the companies will assess the use of NQA-1 steel and related infrastructure for gigawatt-scale nuclear reactors as per the American Society of Mechanical Engineers’ certification standards.
The partnership supports executive orders from President Donald Trump targeting 400 gigawatts (GW) of nuclear capacity by 2050, including construction of 10 large-scale reactors in the next five years, TNC said.
The US has launched an effort to speed development of power plants and transmission lines after Trump on his first day back in office in January issued an order declaring an energy emergency as artificial intelligence, data centers, and electric vehicles are boosting power demand for the first time in two decades.
TNC’s partnership also aims to help the US compete with China and Russia, which have expanded their nuclear reactor fleets rapidly in recent years, it said.
“Our partnership with Nucor will protect America’s national security, help achieve energy independence and create a more resilient economy,” said TNC CEO Jonathan Webb.
Excavation work has started for the foundation of the nuclear island of the second of two CAP1000 pressurised water reactors planned as Phase I of the Bailong nuclear power plant in China's Guangxi Zhuang Autonomous Region.
(Image: Guangxi Nuclear Power)
The excavation of the foundation pit for Bailong 2 began on 28 September, State Power Investment Corporation (SPIC) subsidiary Guangxi Nuclear Power Company Ltd announced.
The construction of Phase I (units 1 and 2) of the Bailong plant was among approvals for 11 new reactors granted by China's State Council in August last year. An investment of about CNY40 billion (USD5.6 billion) is planned for the two CAP1000 units - the Chinese version of the Westinghouse AP1000 - which are expected to take 56 months to construct.
Excavation of about 66,000 cubic metres of earth to form the foundation pit of unit 1 - which will eventually be 12.2 metres deep and cover an area of about 3,000 square metres - began on 30 December. The excavation of the two nuclear island foundation pits utilises a "vertical slope construction technique with support first and excavation later", Guangxi Nuclear Power noted.
"Thanks to the dedicated efforts of all builders, unit 1 is steadily progressing toward achieving its high-quality FCD [first concrete pouring] goals," the company said. "During the initial phase of the excavation for unit 2, the company, in collaboration with all participating units, fully incorporated feedback from the unit excavation, systematically reviewed prerequisites, optimised construction techniques, and completed the construction of the foundation pit retaining structure cast-in-place piles and crown beams on schedule, laying a solid foundation for the smooth progress of the unit 2 nuclear island excavation."
Once Bailong units 1 and 2 are put into operation, the annual power generation of the plant will be about 20 billion kilowatt-hours, Guangxi Nuclear Power said. It noted that this can reduce the consumption of standard coal by about 6 million tonnes and reduce carbon dioxide emissions by about 16 million tonnes annually.
Four CAP1400 reactors are also planned to be built at the site - located about 24 kilometres from the border with Vietnam and about 30 kilometres southwest of China General Nuclear's Fangchenggang nuclear power plant - in later phases.
Oklo tests fuel assembly at DOE lab
Advanced nuclear technology company Oklo Inc carried out full-scale flow testing of a prototypical fuel assembly at the Argonne National Laboratory, generating experimental data to validate computer models, demonstrate manufacturing parameters, and advance Oklo’s fuel assembly design towards production.
The Pressure Drop Experimental Loop for Investigations of Core Assemblies in Advanced Nuclear Reactors (PELICAN) at Argonne (Image: Oklo)
The company worked with Argonne's thermal-hydraulics team and used the lab's test facilities to study how coolant flows through a fuel assembly across a range of operating conditions. The tests measured parameters such as pressure drop and flow distribution, providing data that will benchmark Oklo’s simulations with full-scale performance, the company said.
The testing was done under a US Department of Energy (DOE) Gateway for Accelerated Innovation in Nuclear (GAIN) voucher. The GAIN initiative was launched in 2016 to help businesses overcome critical technological and commercialisation challenges of nuclear energy technologies through a voucher system, giving stakeholders access to the DOE's R&D facilities and infrastructure to support the cost-effective development of innovative nuclear energy technologies.
"These full-scale, prototypical tests are vital in moving us from design into production," said Oklo co-founder and CEO Jacob DeWitte. "The work we're doing through GAIN at Argonne delivers real-world data that will ultimately inform the manufacturing parameters of our fuel-assembly design."
Oklo's Aurora powerhouse is a fast neutron reactor that uses heat pipes to transport heat from the reactor core to a supercritical carbon dioxide power conversion system to generate electricity. Building on the design and operating heritage of the Experimental Breeder Reactor II (EBR-II), which ran in Idaho from 1964 to 1994, it uses metallic fuel to produce electricity and usable heat, and can operate on fuel made from fresh HALEU or used nuclear fuel. The company recently broke ground for its first powerhouse at a site at Idaho National Laboratory.
By combining Argonne's experimental capabilities with Oklo's ability to design and build prototypic Aurora components as part of its design, build, and test cycle, the effort supports the company's cost-effective approach to building large-scale parts for its powerhouses, Oklo said.
Freeport mine setback risks fraying relations with Indonesia
Indonesian president Prabowo Subianto during a visit to India earlier this year. Credit: MEAphotogallery via Flickr
A halt in production at the giant Grasberg copper mine in Indonesia looks set to strain the fractious relationship between miner Freeport-McMoRan Inc. and its host nation, at a time when the Jakarta government was already looking to take greater control.
Freeport declared force majeure on contracted supplies on Wednesday, two weeks after about 800,000 tons of mud flooded underground tunnels. Two workers were killed, while five more remain missing. The US-listed company slashed its production guidance, dragging its shares down 17% and pushing copper futures to the highest level in more than a year.
Grasberg has long been a flashpoint as Jakarta tries to gain a greater say over its resources. The state controls 51% of the local entity — after a lengthy battle over ownership — but officials have sporadically continued to demand an increased share. That clamor may now intensify.
The accident also comes at a challenging time for President Prabowo Subianto, who took office last year and has faced violent street protests, as well as a struggle to fund his costly plans for Southeast Asia’s largest economy. With copper and gold near record highs, Grasberg is a critical source of revenue for the authorities — last year, Freeport’s local unit paid out $462 million to the government and region.
“If output does indeed diminish markedly for numerous months, there will definitely be tensions with the government, which will want revenue to resume and will wish to avoid the discontent arising from a prolonged downturn,” said Kevin O’Rourke, principal at Jakarta-based consultancy Reformasi Information Services. “With Freeport McMoRan in a minority position since 2018, the US company has much weaker negotiating power with the government.”
Prabowo’s government has vowed to curb excesses in the mining sector, and both foreign and local operators have had to contend with higher royalty payments and crackdowns on permit infractions. A forestry task force earlier this month seized a small part of the country’s largest nickel mine, owned by Tsingshan Holding Group Co. and France’s Eramet SA.
Sitting more than 4,000 meters above sea level in the mountains of Central Papua, Grasberg contains one of the world’s largest deposits of copper and gold. Despite the remote location, the high purity of its ore makes it an alluring and profitable asset.
Those riches, at a time when copper has only become more scarce, account for the US miner’s efforts to maintain its stake, despite government interference and investor pressure over its environmental impact and safety record. Dozens of workers have died at the site this century alone, most notably in 2013, when a tunnel collapse killed 28, drawing reprimands from local politicians and unions.
Grasberg has also been a lightning rod for a separatist sentiment in Papua, due to low perceived return of profits to the region, as well as its environmental damage. Indonesian security forces and rebels have sporadically clashed near the mine, resulting in many deaths.
PT Freeport Indonesia, the miner’s local unit, and Indonesia’s Ministry of Energy and Mineral Resources did not respond to requests for comment. State-owned mining company MIND ID, which holds the majority stake in Freeport Indonesia, also did not immediately respond to text-message queries. Sovereign wealth fund Danantara declined to comment.
Greatest trouble
It’s with the central government in Jakarta that Freeport has faced its greatest troubles. Under former President Joko Widodo, Indonesia began to prioritize retaining a greater share of its natural resources by forcing overseas miners to invest in value-added processing, and by taking greater control of key assets. Among the targets was Grasberg.
Executives and officials clashed for years over everything from tax rates to the way Freeport disposed of tailings, or waste from the mine. Production was halted for weeks in 2017 after the government banned concentrate exports, while the US miner threatened to take Indonesia to arbitration over new mining laws it said had violated its contract.
Eventually in 2018, following high-stakes negotiations, a deal was reached under which the government would take majority ownership of the mine, while Freeport’s partner in Grasberg, Rio Tinto Plc, would exit. Freeport also agreed to build a copper smelter in Indonesia, which became emblematic of Jokowi’s initiative to push into mineral processing.
Still, the project faced long delays to its completion, drawing pressure from the government and leading to repeated negotiations over pauses to a final ban on concentrate exports. Even after being finished last year, the facility now looks like a white elephant amid a vast expansion of capacity globally that’s destroyed margins in smelting.
A fire at the site last year further delayed its long awaited ramp-up, forcing the company back into talks over the export ban. After months of delays, Indonesia in March granted a further six-month reprieve that expired last week.
Freeport’s current contract to operate the mine lasts until 2041, but after the latest accident officials have made clear they want a greater stake in return for a 20-year extension. Last week, Rosan Roeslani, chief executive officer of Danantara, said Indonesia now expects more than the initially touted 10% additional holding that would be transferred to the country “free of charge.”
Any further deal may also be complicated both by the accident and by US President Donald Trump’s increasingly defensive attitude toward American companies abroad. Trump has been willing to invoke tariffs to counter taxes that he says unfairly target American firms, and highlighted access to Indonesian copper as a key factor in recent trade negotiations.
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