March 26, 2014 / 7:05 AM / in 4 years

UPDATE 2-Newmont denies output cuts made at its Indonesian copper mine

* Newmont says still shipping to Indonesia’s Gresik copper smelter

* Says export talks with the government continue

* Had forecast its 2014 Indonesian copper output at 110,000-125,000 T (Recasts with Newmont denial, adds company comments)

By Michael Taylor and Wilda Asmarini

JAKARTA, March 26 (Reuters) - Newmont Mining Corp has not cut output at its Indonesian copper and gold mine, a spokesman at the Denver-based company said on Wednesday, denying government claims earlier in the day that its production had been slashed.

Indonesia implemented a ban on mineral ore exports and introduced an escalating export tax for concentrates on Jan. 12 to encourage mineral processing domestically in order to increase the value of exports. However, the new rules have left the mining sector in turmoil.

Newmont and Freeport-McMoRan Copper & Gold, who account for 97 percent of Indonesia’s total copper output, have both halted copper concentrate exports while talks with the government over the export tax rumble on.

“The information is incorrect,” Rubi Purnomo, head of corporate communications for Newmont in Indonesia said in an emailed response to Reuters. “PTNNT (PT Newmont Nusa Tenggara) is producing normally at the moment but able to supply to PT Smelting in Gresik only.”

Earlier, the government’s mineral enterprise director Dede Suhendra told reporters that production at Newmont’s Batu Hijau mine had been cut by 70 percent as the dispute over a new export tax dragged on for more than two months.

The new rules hike to 25 percent a tax for copper concentrate exports, from 20 percent, and levy the tax on Freeport and Newmont for the first time. The tax will rise to 60 percent by the end of 2016, before exports of concentrate are banned from 2017.

“Newmont’s production until today is only 30 percent,” Suhendra told reporters earlier on Wednesday. He added that Newmont had not resumed exports since January, and was now only sending concentrates to Indonesia’s sole copper smelter at Gresik in East Java.

Before the new export rules, Freeport estimated that total copper in concentrate output from its Indonesian mine would be 500,000 tonnes this year, while Newmont forecast output at 110,000-125,000 tonnes.

Freeport ships about 40 percent of its total copper concentrates production to PT Smelting, which has a concentrate capacity of about 660,000 tonnes, while Newmont supplies around 30 percent of its Indonesian output to the same smelter.

“As we meet with government officials in the coming days and weeks to find a solution as soon as possible in regard to export issues, PTNNT also has an operational contingency plan in place,” Newmont’s Purnomo added.

Suhendra could not immediately be contacted on phone after Newmont’s denial.

Newmont said last month that it expects normal mining operations to continue at the mine in Indonesia for at least the next two months.

Freeport has previously said that its Grasberg mine in Papua is now producing at half of its capacity, but had not cut any jobs so far.

Freeport in 2012 paid the government around $1 billion in taxes and fees, while Newmont has paid more than $3 billion since 2000. (Additional reporting by Melanie Burton in Singapore; Reporting by Wilda Asmarini; Writing by Michael Taylor; Editing by Michael Perry and Muralikumar Anantharaman)

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