* No formal deal on Grasberg copper mine, but talks positive - CEO
* Temporary permit extended to June
* Freeport Q4 profit beats forecasts (Recasts; adds executive comments from conference call, details on potential permit deal)
By Susan Taylor
TORONTO, Jan 25 (Reuters) - Freeport-McMoRan Inc FCX.N said it was edging closer to a permit deal with Indonesia for its massive Grasberg mine, but the world's second-biggest copper producer cautioned that it has not yet struck any formal agreements.
There has been little sign of progress since last August, when Freeport promised to divest a 51-percent stake in Grasberg, the world's second-biggest copper mine, to the Indonesian government, in exchange for long-term operating rights. negotiations have produced positive results, insisted Chief Executive Richard Adkerson on a conference call with analysts, adding that all parties aim to complete talks in the first half of 2018.
Both sides had agreed on standards to set a fair market value for Freeport's divestment - a key sticking point to date - and the government had accepted Freeport's demand for long-term financial and legal certainty, he said.
"We're focused on getting this Indonesian thing resolved and recognize that until we do, that's going to be a factor for credit ratings, stock valuation," Adkerson said.
Grasberg produced 1 billion pounds of copper in 2017, making it key both to Freeport's operations and global copper supply.
The company repeated a warning that it could scrap multi-billion-dollar development plans in Indonesia or pursue arbitration if negotiations fail.
Indonesia introduced new rules to gain greater control over mineral resources in 2017, requiring miners to divest a majority stake in their operations, relinquish arbitration rights and pay new taxes and royalties. has also agreed to build a new smelter and said it was considering partnership with Indonesian miner PT Amman for the development.
With its announcement of market-beating quarterly profits lifted by stronger prices, Freeport said a temporary Grasberg permit was extended to June 30 and it was seeking extension for its export license beyond Feb. 16. said it was also helping Indonesia evaluate the 40-percent interest in Grasberg held by joint venture partner Rio Tinto RIO.L RIO.AX , which is discussing a deal with the government.
Rio's holding could be converted into shares of Freeport's Indonesian unit, Indonesia's mining minister has said, making up the bulk of the government purchase. a deal could reduce Freeport's divestment stake to roughly 10 percent, Adkerson said, noting the government's current 9.36 percent holding.
Freeport said it was also discussing potential divestment arrangements with Rio and Indonesian state-owned enterprise Inalum, which will lead a consortium of investors.
As it mines the final phase of Grasberg's open pit, Freeport said it will require $900 million in annual capital for five years to develop underground operations.