Newmont, Indonesia make peace: copper exports may resume this week
Newmont Mining (NYSE:NEM) reached Tuesday a tentative agreement with the Indonesian government on contract renegotiations, with copper concentrate exports likely to resume as early as this week.
The US miner agreed to pay an increased export tax, WSJ.com reports. The other points agreed in the renegotiations include royalties, size of mining and exploration area, domestic processing and divestment obligations and possible mining contract extension.
Newmont has been in a dispute with the Indonesian government over an export tax imposed in January that the firm said conflicted with its mining contract. The Colorado-based company declared force majeure at its Batu Hijau copper and gold mine in June and filed for international arbitration in July, withdrawing it only last week.
The company would pay an export tax of 7.5% on its copper concentrate, significantly lower than what Indonesia had originally asked. The miner, the world's third-largest gold producer by market value, is also said to have agreed to increase royalties to 3.75% from 1% for gold, to 4% from 3.5% for copper, and to 3.25% from 1% for silver
Rival Freeport-McMoRan (NYSE:FCX), which operates Grasberg —a much larger copper and gold mine in Indonesia than Newmont's—, managed to reach a preliminary deal over its copper exports with Indonesian authorities and resumed exports in early August.
Newmont’s Batu Hijau copper and gold mine, on the island of Sumbawa Barat, began its operations in 2000. The company had forecasted copper concentrate output for 2014 at 110,000-125,000 tonnes before the new export rules.
Today’s deal still needs to be approved by several government officials, including Chief Economics Minister Chairul Tanjung, before a Memorandum of Understanding (MoU) is signed by both parties.
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