Newmont seeks international arbitration to resolve copper export issues in Indonesia

2 July 2014 (Last Updated July 2nd, 2014 18:30)

Newmont Nusa Tenggara (PTNNT) and its Dutch shareholder Nusa Tenggara Partnership have filed an international arbitration against the Indonesian Government, seeking exemption from copper ore export restrictions in the country.

PTNNT

Newmont Nusa Tenggara (PTNNT) and its Dutch shareholder Nusa Tenggara Partnership have filed an international arbitration against the Indonesian Government, seeking exemption from copper ore export restrictions in the country.

In the arbitration filed with the International Centre for the Settlement of Investment Disputes, PTNNT has requested the organisation to allow it to resume copper exports and restart operations at the Batu Hijau mine.

PTNNT halted production at its Batu Hijau mine in June after Indonesia refused to revoke the ban and additional taxes imposed on copper ore and concentrate exports.

Indonesia imposed the ban and introduced a progressive tax on concentrates in January, in an attempt to make the companies build smelters and processing plants within the country.

The mining companies are required to pay export tax of up to 60% by the second half of 2016, while the concentrate exports will be totally banned in 2017.

According to Newmont, the additional export tax and the ban violate the contract of work and bilateral investment treaty signed between Indonesia and the Netherlands.

"The mining companies are required to pay export tax of up to 60% by the second half of 2016, while the concentrate exports will be totally banned in 2017."

PTNNT president director Martiono Hadianto said that, despite their best efforts to resolve the export issues over the last six months, PTNNT has been unable to reach an agreement with the government.

"As a result, PTNNT and its shareholders are left with no option but to seek relief through international arbitration to ensure our stakeholders' jobs, rights, and interests are protected," Hadianto said.

"We want continued dialogue with the government to lead to a resolution outside of arbitration. In the meantime, we have an obligation to protect the value of Batu Hijau and the thousands of jobs it provides, as we are still unable to export copper concentrate due to the regulations."

Newmont has placed its Batu Hijau mine in care and maintenance, but plans to continue shipping concentrate from storage to Indonesia's only copper smelter, PT Smelting, throughout this year.

Meanwhile, PTNNT has signed conditional concentrate supply agreements with two Indonesian firms and is working with a third to build their own copper smelters in the country.


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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