Newmont gets export permit despite pending smelter fund

The Jakarta Post reported that a recommendation letter that permits mining company PT Newmont Nusa Tenggara, a subsidiary of US based Newmont Mining Corporation to export copper will be issued soon, but the government will limit the amount of concentrates allowed to be exported as the company has yet to fulfill its obligations for developing a smelter.

Newmont last month withdrew an international arbitration request that criticized the Indonesian government’s policy banning ore exports as it had cost the company dearly. The government’s policy was aimed at developing the country’s downstream industry and at adding value to exported mineral products.

The withdrawal was followed by MoU between Newmont and the government that will allow the company to resume exporting under the condition that it would build a processing plant to strengthen the country’s upstream mineral industry.

Mr R Sukhyar, director general for minerals and coal at the Energy and Mineral Resources Ministry, said that his office had sent a recommendation letter to the Trade Ministry to allow Newmont to export 304,515 tonnes of copper concentrate for six months. The export quota could be increased if the company kept its promise to process their concentrates at a local smelting plant.

Mr Sukhyar said that the quota calculation includes the capacity of the smelter that will be built by PT Freeport Indonesia, even though Newmont has yet to transfer a surety bond worth USD 25 million, or 5% of the total investment, as a guarantee that it is serious about constructing the plant.

Mr Sukhyar refused to confirm whether the permit violates the agreement because the government was convinced that Newmont would submit the surety bond funds at the same time that the Trade Ministry would officially issue the permit.

Last week, the Energy Ministry asked Newmont to build its own smelter or establish partnerships with companies other than Freeport Indonesia so that it would not have to rely on the latter’s refining facility.