Gold production at Newmont Nusa Tenggara’s Batu Hijau mining site rose 14 percent in the January-March period of 2014 from a year earlier, while copper output increased 11 percent. (JG Photo/Safir Makki)
Jakarta. Newmont Nusa Tenggara, a subsidiary of US-based gold mining giant Newmont Mining and a Contract of Work holder, announced on Thursday that it had stopped operations at its Batu Hijau copper and gold mine in West Nusa Tenggara as a consequence of a government policy that restricts export of unrefined copper.
On the same day, executives from NNT and Freeport Indonesia, another US miner and CoW holder affected by the policy, met with officials from the Energy and Mineral Resources Ministry to lobby for a settlement that would remove part of the restriction on exports of unrefined copper.
The talks were part of the government’s ongoing attempts to push for new terms with CoW holders.
NNT was forced to stop production and furlough 80 percent of some 8,000 employees after its storage facilities on Sumbawa Island reached maximum capacity.
The mining giant said it had stockpiled some 81,000 metric tons of copper concentrate to supply a smelter in Gresik, East Java, for the remainder of the year.
NNT provides the only facility in Indonesia that can refine copper concentrate into copper cathode. Three-quarters of that feedstock comes from Freeport.
The company also processes its copper ores into a by-product called concentrate, which it claims represents 95 percent of the market value.
During his meeting with the ministry, NNT president director Martiono Hadianto called on the government to reconsider its strict restrictions, saying the miner “respectfully requests the government to allow NNT to resume operations and exports of copper concentrates” without facing harsh penalties.
According to a Jan. 12 ministry regulation, both local and foreign copper miners are prohibited from exporting unprocessed minerals in order to promote domestic refining activities, and thus add value to exports. Companies that wish to go ahead with exports face a 25 percent punitive charge.
Freeport president director Rozik B. Soetjipto and Newmont’s Martiono met with several government officials including R. Sukhyar, the director general for coal and mineral resources.
“Yes [we have reached an agreement],” Rozik said without being specific, adding that both parties “just need [to finalize] the legal language.”
While Freeport appeared to be making progress, NTT’s fate remains unclear.
The miner has repeatedly lamented that it lacks both the financial capacity and mining scale to make the investment needed for a smelter, noting that Freeport’s Grasberg copper and gold mine in Papua is significantly larger and holds more resources than NNT’s Batu Hijau mine.
Separately, NNT’s workers unions revealed plans to stage a protest outside the Finance Ministry building in Jakarta today to demand an export permit for NNT.
Miners like NNT and Freeport have had to overcome a series of hurdles in Indonesia ever since the 2009 Mining Law drastically altered the industry. Among the changes is the introduction of a Mining Business Permit to replace CoWs and the requirement for miners to process and refine raw mineral ore before exporting.
By Tito Summa Siahaan & Rangga Prakoso on 07:08 pm Jun 05, 2014
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