* No deal expected this week -deputy finance minister
* Tax rate to be linked to progress on smelters
(Adds Newmont's response)
By Wilda Asmarini and Adriana Nina Kusuma
JAKARTA, June 4 Foreign copper miners in
Indonesia have agreed in principle to pay a controversial export
tax, the country's deputy finance minister said, following a
series of talks aimed at restarting concentrate exports after a
The move would signal progress in reaching a deal over the
tax, which was introduced on Jan. 12, along with a ban on
mineral ore shipments, as part of moves to force miners to build
smelters and processing plants in Southeast Asia's largest
The new export tax halted about $500 million worth of
monthly mineral ore and concentrate exports and led
Freeport-McMoRan Copper & Gold Inc and Newmont Mining
, which account for 97 percent of Indonesia's copper
output, to slash production, arguing it conflicts with their
"What has been agreed on is the principle of the export
tax," Deputy Finance Minister Bambang Brodjonegoro told
reporters following government talks involving Freeport chief
executive Richard Adkerson. "They agreed to an export tax."
Brodjonegoro said he did not expect the government and
miners to reach a deal on the tax this week.
Freeport and Newmont have previously argued that they should
be exempt from the tax, which kicks in at 25 percent and rises
to 60 percent in the second half of 2016, before a total
concentrate export ban in 2017. They said their current
contracts prohibit any extra taxes.
Under the new proposal, officials would draft a tax
regulation that would set a lower rate for miners that were
progressing with plans to build smelters.
Freeport's chief financial officer, Kathleen Quirk, said at
an investor conference in Chicago on Wednesday that the company
expects to resume exports very soon. The company's production
forecasts for the year had assumed exports would resume in May.
"The deal is not done yet, we're not in a position today to
announce it, but I can report that we are making progress,"
Quirk said. Freeport expects the export tax would be
"significantly reduced," she said.
Newmont is waiting to see the terms and conditions of the
updated regulations before deciding if it is "feasible and
appropriate" to pay an export duty on top of the taxes it pays
already, company spokesman Omar Jabara said in an emailed
Both U.S. miners have questioned the economic viability of
building new copper smelters in Indonesia, but have agreed to
study the possibility of building a copper smelter with
state-owned miner Aneka Tambang.
Separately, Indonesia's industry minister, M.S. Hidayat,
said the export tax would be reduced. He was unable to give
details but said the government and mining companies were close
to an agreement.
The push to settle the dispute follows the appointment of
billionaire businessman Chairul Tanjung as chief economics
minister last month. Tanjung made restarting copper exports a
top priority, amid a widening trade deficit, a slowdown in
first-quarter economic growth and the prospect of job layoffs at
Newmont said on Tuesday it had halted copper concentrate
production at its Batu Hijau mine as its storage facilities were
full, but had delayed standing down its 8,000 employees and
contractors ahead of this week's meetings.
Tanjung led a series of high-level government and industry
meetings on Wednesday, aimed at brokering a deal on the tax, and
resolving contract renegotiations for major miners.
(Additional reporting by Allison Martell in Toronto and Nicole
Mordant in Vancouver; Writing by Michael Taylor and Fergus
Jensen; Editing by Richard Pullin, Grant McCool and Leslie