US-based gold miner Newmont Mining has placed its Batu Hijau mine in force majeure and intimated the Indonesian Government about its plans to put mine employees on leave with reduced pay.
The decision comes days after Newmont's Indonesian subsidiary the PT Newmont Nusa Tenggara (PTNNT) halted its production of copper concentrate at Batu Hijau mine, following the Indonesian Government's failure to revoke the mineral export ban imposed in January.
PTNNT president director Martiono Hadianto said the company has taken numerous steps to help resolve the export issue and support the government with increasing in-country smelting.
"However, despite our best efforts, we have not been able to export copper concentrate since January, and we still do not have an export permit," Hadianto said.
"We are left with no option but to declare force majeure."
Placing the company in force majeure will allow the company to ignore certain terms of the contractual agreement.
Newmont and Freeport-McMoRan, which account for 97% of Indonesia's total copper output, had previously criticised the new law, stating that the increased taxes conflict with the original long-standing agreements signed with Indonesia.
The taxes on copper concentrates are currently between 20% and 25%, but will gradually go up to 60% by 2016.
According to Newmont, the Batu Hijau mine will be placed under care and maintenance, but the company will continue shipping concentrate from storage to Indonesia's only copper smelter, PT Smelting at Gresik throughout the year.
Indonesian Industry Minister MS Hidayat said that a deal on lowering export duties was near.
"But as these are all long term contracts, there needs to be legal fine-tunings," Hidayat said.
Indonesia Mining Ministry mineral enterprise director Dede Suhendra said the government would try to help Newmont overcome obstacles relating to exports, in response to the force majeure.
Meanwhile, Indonesian mine workers' union chairman Yoesrawan Galang said the union will sue both parties due to the impact the dispute has had upon workers.
"We will sue both Newmont and the government because they have been so arrogant, and caused the workers to be the victims of their arrogance," said Galang.