Newmont may reduce production at Batu Hijau copper and gold mine in Indonesia

7 May 2014 (Last Updated May 7th, 2014 18:30)

The Indonesian unit of US-based gold miner Newmont Mining, Newmont Nusa Tenggara (PTNNT), may reduce production at its Batu Hijau gold and copper mine from 1 June, if the company does not receive government permission to export its concentrates.

The Indonesian unit of US-based gold miner Newmont Mining, Newmont Nusa Tenggara (PTNNT), may reduce production at its Batu Hijau gold and copper mine from 1 June, if the company does not receive government permission to export its concentrates.

In January, Indonesia introduced a higher tax on copper concentrate exports and also banned exports of some unprocessed minerals.

Newmont and rival, Freeport-McMoRan Copper and Gold, claim that despite being exempt from the ban, both were paying the higher tax rates on exports.

According to Newmont, the imposition of new taxes conflicts with the original agreements signed with Indonesia.

"This is a very unfortunate and difficult situation for all of us, as it will disrupt the lives of our 8,000 employees and contractors and impact thousands of more people."

While negotiating with the government, Newmont said that Batu Hijau's copper concentrate storage facilities will reach capacity in late May, requiring an orderly ramp-down of operations.

"Once the mine's copper concentrate storage is filled, PTNNT will move to cease mining and milling," Newmont said.

From June, the company will put employees on leave and pay reduced salaries.

PTNNT president director Martiono Hadianto said the company supports the government's goal of increasing domestic processing and will continue engaging with them to resume exports and protect existing jobs, local businesses and revenues, supported by the export and sale of Batu Hijau's copper concentrate.

"While our contract of work explicitly guarantees our right to export copper concentrate and establishes all the taxes and duties PTNNT is required to pay, we have taken numerous steps to support the government's desire to increase in-country smelting," Hadianto said.

"This is a very unfortunate and difficult situation for all of us, as it will disrupt the lives of our 8,000 employees and contractors and impact thousands of more people in the Sumbawa Barat area who derive their incomes from our operation."

Prior to the new export rules, Newmont expected to produce between 110,000t and 125,000t of copper concentrate this year.

However, Newmont stated that Batu Hijau will continue to ship and sell copper concentrate to PT Smelting throughout the year.

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