Indonesia threatens to hand over Newmont Mine if output does not resume

FE Team | Published: July 18, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

JAKARTA, July 17 (Reuters): Indonesia stepped up pressure on Newmont Mining over a six-month old dispute that has halted copper exports, warning it could hand the US miner's licence to a state-owned firm if it does not resume shipments.
The outgoing government earlier this week warned it could terminate Newmont's mining contract after the US company halted production and filed legal arbitration over a new export tax.
The developments represent the latest twist in a six-month contract dispute between Indonesia and US miners Newmont and Freeport-McMoRan Inc that has led to a halt in copper concentrate shipments from Southeast Asia's biggest economy.
Indonesia plans to soon send a letter to Newmont saying that the company has defaulted on its contract, said Sukhyar, director general of coal and minerals at the mining ministry.
"The default is due to the stopping of production, so we can say they are negligent," Sukhyar told reporters on Thursday.
Newmont and Antam officials were not immediately available for comment.
If the government terminates Newmont's contract, the mining ministry said it would first offer the Batu Hijau mine to Aneka Tambang (Antam), the country's only state-owned metal mining producer.
"The procedure is this mining site will be given back to the government," Sukhyar said. "First, the government will offer it to state-owned enterprise, then local-government owned enterprise, and then private."
Indonesia's likely next president has signaled a more conciliatory approach to the contract dispute with Newmont. A senior party official of presidential front-runner Joko "Jokowi" Widodo, told Reuters his government would seek negotiations with the miner.
Newmont declared force majeure on shipments last month and said it had been forced to halt production at its Batu Hijau copper mine in eastern Indonesia because it had still not received an export permit from the government and that its storage facilities had reached full capacity in early June.
Thousands of its employees have been placed on leave at reduced pay.
Before the new export rules, Colorado-based Newmont forecast copper concentrate output for 2014 at 110,000-125,000 tonnes at its Indonesian mine, but halted production earlier this week after it was unable to break the deadlock over the new export rules.