By I Made Sentana
JAKARTA, Indonesia--PT Newmont Nusa Tenggara, the Indonesian
unit of U.S. gold miner Newmont Mining Corp. (NEM), may start
reducing production at its Batu Hijau gold and copper mine by June
1 if it fails to get permits to export its concentrates, the
company said Wednesday.
The Batu Hijau's copper-concentrate storage facilities will
reach full capacity in late May, requiring an orderly ramp down of
operations, the company said.
"Once the mine's copper-concentrate storage is filled, PTNNT
will move to cease mining and milling, along with significantly
scaling back contracted services, purchasing, and capital
expenditure, with corresponding adjustments in employee work
schedules and reductions in overtime," the company's President
Director Martiono Hadianto said in a news release.
To minimize expenses and preserve the ability to return to
normal operations in a timely fashion, most of Newmont Nusa
Tenggara's employees will be placed on leave at reduced pay
starting in early June, the company said, adding it will continue
talks with the government.
Indonesia, a major producer of commodities such as nickel ore,
bauxite, tin, copper and thermal coal, in January banned raw
mineral-ore exports to force miners to process their products in
Indonesia to boost the value chain of its industry. The government
also imposed export duties on mineral concentrates such as copper,
iron, zinc and manganese of between 20% and 25%, which would be
progressively raised to 60% by late 2016%.
Miners in Indonesia mostly smelt a relatively small part of
their minerals in the country. They argued producing the metal from
its ore isn't economical in the country and that they can't compete
with smelters in the region such as those in China.
Newmont Nusa Tenggara and PT Freeport Indonesia, the local unit
of Freeport-McMoRan Copper & Gold Inc. (FCX), have said the
export tax is a breach of their contracts with the government.
"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," Mr.
Hadianto said Wednesday.
Newmont Nusa Tenggara has agreed to supply copper concentrates
to two companies that will build smelters in Indonesia.
Freeport Indonesia meanwhile has also warned it will have to cut
production at its Grasberg mine in east Indonesia if it is banned
from exporting.
The government hadn't issued any comment as of the time of
publication of this article on Wednesday.
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