Newmont Indonesia declares force majeure

Newmont Indonesia has informed the government and employees that it is declaring a force majeure at its copper and gold mine in Batu Hijau amid restrictions on exports.

Newmont Indonesia has informed the government and employees that it is declaring a force majeure at its copper and gold mine in Batu Hijau amid restrictions on exports.

The company has placed about 80% of Batu Hijau’s 4,000 employees on leave at reduced pay starting Friday June 6, it said in a statement on Thursday.

“We have taken numerous steps to help resolve the export issue and support the government’s desire to increase in-country smelting,” Martiono Hadianto, president director of PT Newmont Nusa Tenggara (PTNNT), Newmont’s local subsidiary, said in the statement.

“We have not been able to export copper concentrate since January and we still do not have an export permit,” he said, adding, “The new export conditions, duty and ban fundamentally impact Batu Hijau’s economics and conflict with our contract of work. As a result, we are left with no option but to declare force majeure.”

PTNNT said it continues discussions with the government to seek a resolution of the export issues, however, “the Batu Hijau copper and gold mine will be in care and maintenance as efforts to resolve the export issues continue”.

PTNNT said it would continue selling copper concentrate from storage to Indonesia’s only smelter PT Smelting in Gresik. It has said it supplies about 30% of its copper concentrates production to the smelter.

The company expects to make about 81,000 tonnes of concentrate shipments to Gresik between now and the end of the year.

“PT Smelting has capacity limitations and cannot purchase sufficient quantities of PTNNT’s copper concentrates to allow for ongoing normal operations at Batu Hijau,” the company said.

Earlier this week, the company said it had stopped production at its Batu Hijau mine in Indonesia as it sheds were full. 

PT Freeport Indonesia and PTNNT have not exported copper concentrates since the export ban came into effect on January 12. This was accompanied by a proposal to tax concentrates at 25% now, 35% at the beginning of next year and 60% by the second half of 2016.

Officials from the major copper producers met with government officials this week.

Local media reports quoted government officials as saying that the producers have agreed “in principle to pay an export tax”.

No details on what the new export tax would be and how it will be linked with the companies’ downstream plans have been made available.

Shivani Singh
Twitter: @ShivaniSingh_MB 

What to read next
US President Joe Biden will increase tariffs on Chinese imports including steel and aluminium, electric vehicles, semiconductors and advanced batteries, to counteract China’s “unfair” trading practices, he announced on Tuesday May 14
Anglo American's rejection of takeover bids by BHP has put copper firmly under the spotlight, but what challenges lie ahead for the red metal as the corporate tussle continues?
Copper fabricators in China and the wider Southeast Asian region continue to feel the pain of high copper prices on futures exchanges and a lack of new orderbooks, with some having already asked for a postponing of shipments of long-term copper cathodes, sources told Fastmarkets in the week to Wednesday May 15
Recent weeks have seen a significant number of miners agreeing sales of copper concentrate to traders for one to four years of supply, Fastmarkets has learned
The copper market is facing a historical moment with Chinese smelters now paying premiums for raw material copper concentrate while selling their finished product at a discount, but participants point to easing concentrate demand in the second quarter as supportive for the market
The new tariffs on aluminium imports imposed by Mexico are affecting the light metal's supply chain, trade flows and premiums, sources told Fastmarkets during the week to Friday May 3.