June 3, 2014 / 7:00 AM / 4 years ago

UPDATE 1-Newmont halts copper concentrate output at Indonesian mine

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JAKARTA, June 3 (Reuters) - Newmont Mining Corp said it has halted copper concentrate production at its Batu Hijau mine in Indonesia as a deadlock continues over controversial mining rules that have halted concentrate exports since mid-January.

Newmont, which said its storage facilities at the mine were full after the near five-month export halt, said it had delayed standing down its 8,000 employees and contractors ahead of a government meeting this week.

The prospect of widespread job layoffs could add to pressure on the Indonesian government to find a solution to the stand-off, after weaker exports contributed to slower first-quarter economic growth and a swelling trade deficit in April.

Newmont and fellow U.S. miner Freeport McMoRan Copper & Gold Inc account for 97 percent of Indonesia’s copper output. The two firms are still shipping out some refined copper, but have halted exports of copper concentrate after objecting to the imposition of a new escalating tax.

Both firms are expected to hold talks with senior government officials this week in the hope of breaking the hiatus to copper shipments.

Newly appointed chief economics minister, billionaire businessman Chairul Tanjung, has said he will review the mining export rules and hopes exports can resume.

“Newmont Nusa Tenggara (PTNNT) today said that its concentrate storage facilities at Batu Hijau are now full, forcing the operation to halt processing activities and cease production of copper concentrate,” Newmont said in a statement.

It was “waiting for results of a ministerial meeting this week that is intended to clarify the conditions under which copper concentrate exports will be permitted” before sending home employees and contractors.

A mining union official told Reuters production had stopped “since two days ago” and the company had not declared force majeure.

Freeport said earlier this year it had cut production at its Grasberg mine in Papua, Indonesia, the world’s fifth-largest copper mine, by around 60 percent and that a force majeure could be announced if the dispute dragged on.

While Freeport’s CEO is expected to come to Jakarta this week to discuss the deadlock, Newmont’s chief executive had no plans to come to Jakarta at present, PTNNT spokesman Rubi Purnomo said.

No further details were available from Freeport or Newmont about their planned meetings.

Government officials were working to issue a new regulation to resolve the dispute but needed presidential approval, Finance Ministry fiscal policy chief Andin Hadianto told Reuters.

The government has targeted copper concentrate exports of 800,000 tonnes this year, provided the deadlock is resolved this week, a mining ministry official said last week. Of this amount, Newmont is expected to contribute 250,000 tonnes.

Before the new export rules, Newmont forecast copper concentrate output for 2014 at 110,000-125,000 tonnes. (Reporting by Wilda Asmarini, Fergus Jensen, Michael Taylor, Yayat Supriatna and Nina Kusuma; Editing by Richard Pullin)

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