(Adds company statement)
By Michael Taylor and Yayat Supriatna
JAKARTA Aug 26 Newmont Mining Corp has
withdrawn an international arbitration filing against the
Indonesian government, government and company officials said on
Tuesday, indicating a possible breakthrough in a seven-month
dispute that halted exports.
Newmont's Indonesian Chief Executive Martiono Hadianto said
the mining giant had reached a "constructive solution" over new
mining rules and expected to resume production at its copper
"The decision to discontinue and withdraw arbitration comes
after commitments from senior government officials to open
formal negotiations to conclude a Memorandum of Understanding
(MoU) with PTNNT (PT Newmont Nusa Tenggara) upon cessation of
the arbitration claim," the company said in a statement late on
"Signing of a MoU with the government would be followed by
the safe ramp-up of copper concentrate production and exports
from Batu Hijau."
U.S.-based Newmont, which declared force majeure at its Batu
Hijau copper mine in June and then filed for arbitration in
July, has been in a dispute with the Indonesian government over
an export tax imposed in January that the U.S.-based miner says
conflicts with its mining contract.
The controversial export tax was part of government moves to
force all miners to develop local mineral-processing facilities,
which would bring bigger returns for Indonesia from its mineral
The government has yet to receive an official letter from
Newmont, said Sukhyar, director-general of coal and minerals at
the mining ministry, adding that Newmont still needed to
negotiate a MoU before exports could be resumed.
Sukhyar said Newmont had agreed to pay an export tax but
that further negotiations were needed over royalties.
Chief Economics Minister Chairul Tanjung is expected to make
an announcement on Newmont's arbitration on Wednesday, said
Susyanto, the director of the law bureau for the mines ministry.
Mining industry executives in Indonesia have balked at the
idea of developing downstream industries and building smelters,
citing a lack of power and infrastructure in remote areas where
mines are often located.
The relationship between Newmont and the Indonesian
government has been severely tested during the dispute, with
outgoing president Susilo Bambang Yudhoyono criticising the
In contrast, President-elect Joko Widodo, who will replace
Yudhoyono in October, said he wanted to sit down with mining
companies in a bid to resolve the row over policies. It is not
known whether Widodo was involved in the talks that led to
Newmont's withdrawal of its arbitration case.
Before the new export rules, Newmont forecast total output
of copper in concentrate would amount to 110,000 to 125,000
tonnes from its Indonesian mine this year.
Shares of the Denver, Colorado-based gold and copper miner
were up just over 1 percent at 1540 GMT.
Freeport-McMoRan Inc's Indonesian unit resumed
exports earlier this month after clinching a deal and signing an
MoU with the government in July.
Both Freeport and Newmont, which account for 97 percent of
Indonesia's copper output, had previously argued 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.
Freeport agreed to a much reduced export tax rate of 7.5
percent, which will fall further depending on its progress in
the construction of a domestic copper smelter.
(Additional reporting by Wilda Asmarini and Fergus Jensen;
Editing by Randy Fabi and David Evans and Jane Baird)