Indonesia to terminate Newmont’s contract unless lawsuit is withdrawn

15 July 2014 (Last Updated July 15th, 2014 18:30)

The Indonesian Government has threatened to terminate Newmont's copper mine contract if the company does not withdraw its lawsuit opposing export taxes in the country.

NM

The Indonesian Government has threatened to terminate Newmont's copper mine contract if the company does not withdraw its lawsuit opposing export taxes in the country.

Newmont's Indonesian subsidiary, PT Newmont Nusa Tenggara (PTNNT), halted production at its Batu Hijau mine in June and filed international arbitration against the government in early July, seeking exemption from copper ore export restrictions and revised taxes.

Another US mining company, Freeport-McMoRan Copper & Gold, has also halted copper exports from the country since the government announced its revised export policy in January.

Mining ministry coal and minerals director general R Sukhyar said: "By stopping production, they are making our state revenues decline so we can say that they have defaulted."

Newmont, however, said that the company has been forced to stop copper production as its storage facilities reached full capacity in June, in the absence of export permit.

"By stopping production, they are making our state revenues decline so we can say that they have defaulted."

Newmont spokesman Omar Jabara was quoted by Reuters as saying: "PTNNT's contract of work with the Government of Indonesia explicitly grants the company the right to export copper concentrate.

"As such, PTNNT remains in compliance with the contract of work and is prepared to resume production upon receiving an export permit from the government."

Sukhyar added that Newmont's contract could be revoked within 90 days if the government declares it a defaulter or negligent.

Indonesia imposed the export ban and introduced a progressive tax on concentrates in order to encourage the companies build smelters and processing plants within the country.

Newmont opted for an international arbitration while Freeport-McMoRan signed a Memorandum of Understanding with the Indonesian Government over contract renegotiations.


Image: The Batu Hijau mine is located in Sumbawa in West Nusa Tenggara province of Indonesia. Photo: courtesy of Randi Ang.

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