(Adds Newmont comments)
By Wilda Asmarini
JAKARTA, Sept 18 (Reuters) - Newmont Mining Corp’s Indonesian copper export permit will not be renewed beyond Friday unless the U.S. miner submits a progress update to the government on its plans to develop a domestic smelter, a mine ministry official said.
Newmont, Indonesia’s second-largest copper miner, reached an agreement with the government a year ago to develop local mineral processing facilities to end an eight-month tax dispute that halted exports.
The past month has seen a number of output cuts at copper mines in response to prices mired at six-year lows, and a sustained export stoppage at Newmont could help support prices.
“Newmont hasn’t submitted their smelter progress,” Bambang Gatot, director general of coal and minerals at the energy and mineral resources ministry told reporters on Friday.
“If they don’t submit it, they won’t get a recommendation for an export permit,” said Gatot, adding that Newmont would need approval from his ministry before an export permit could then be issued by the trade ministry.
Indonesia had imposed a hefty export tax in January 2014 as part of moves to force all miners to develop domestic smelters, which would bring bigger returns for the government from Indonesia’s mineral resources.
“We are now still working to fulfill all requirements to obtain an export recommendation letter from the ministry of energy and mineral resources, and the export permit from the ministry of trade, which will be expired on September 22,” Newmont spokesman Rubi Purnomo told Reuters in an email.
Newmont is forecast by the Indonesian government to produce 500,000 tonnes of copper and gold concentrate in 2015 “at most”, up from 400,000 tonnes in 2014.
Newmont, which experienced similar problems obtaining a new six-month permit from the government in March, has previously said multiple studies show its Batu Hijau mine cannot sustain a smelter on its own.
The Indonesian government has urged Newmont and Indonesia’s biggest copper miner Freeport-McMoRan Inc to work together on a new smelter.
Freeport, which runs one of the world’s largest copper mines in the eastern region of Papua, has seen its exports hindered over the past month by new payment rules for buyers, the closure of the company’s only domestic smelter and the El Nino weather pattern. (Reporting by Wilda Asmarini; Additional reporting and writing by Michael Taylor; Editing by Joseph Radford and Gopakumar Warrier)