Newmont denies claims that it cut production in Indonesia

March 27, 2014

Responding to allegations made by the Indonesian government, Newmont Mining Corp. said it has not cut output from its Batu Hijau Mine because of Indonesia’s recent ban on mineral ore exports.

Indonesia implemented a ban on mineral ore exports and introduced an escalating export tax for concentrates on Jan. 12 to encourage mineral processing domestically in order to increase the value of exports. However, the new rules have left the mining sector in turmoil, Reuters reported. 

As the details of the export tax continue to worked out Newmont, along with Freeport-McMoRan Copper & Gold, who account for 97 percent of Indonesia's total copper output, have both halted copper concentrate exports. However, in an email to Reuters Newmont denied the allegation that output had been cut by 70 percent.

"The information is incorrect," Rubi Purnomo, head of corporate communications for Newmont in Indonesia said in an emailed response to Reuters. "PT Newmont Nusa Tenggara (PTNNT) is producing normally at the moment but able to supply to PT Smelting in Gresik only."

The government's mineral enterprise director Dede Suhendra told reporters that production at Newmont's Batu Hijau mine had been cut by 70 percent as the dispute over a new export tax dragged on for more than two months.

The new rules hike to 25 percent a tax for copper concentrate exports, from 20 percent, and levy the tax on Freeport and Newmont for the first time. The tax will rise to 60 percent by the end of 2016, before exports of concentrate are banned from 2017, Reuters reported.

Before the new export rules, Freeport estimated that total copper in concentrate output from its Indonesian mine would be 500 kt (550,000 st) this year, while Newmont forecast output at 110 kt-125 kt (121,000 – 137,000 st).

Freeport ships about 40 percent of its total copper concentrates production to PT Smelting, which has a concentrate capacity of about 660 kt (727,000 st) , while Newmont supplies around 30 percent of its Indonesian output to the same smelter.

Newmont said last month that it expects normal mining operations to continue at the mine in Indonesia for at least the next two months.

Freeport has previously said that its Grasberg mine in Papua is now producing at half of its capacity, but had not cut any jobs so far.

Freeport in 2012 paid the government around $1 billion in taxes and fees, while Newmont has paid more than $3 billion since 2000.


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