Freeport's Export Permit Extension Raises Hopes for Newmont
Batu Hijau. A contract extension given to Freeport Indonesia raises hopes for fellow US gold and copper miner Newmont Nusa Tenggara to keep working after March.
The miner, known as NNT, is now operating its mine in Batu Hijau, Sekongkang district, West Nusa Tenggara province on a six-month concentrate export permit, which expires in March. The government is evaluating the miner’s export permit based on the progress of its smelter development.
Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, secured on Sunday a six-month extension of its export permit, after the company rented land in Gresik, East Java, on which it would build a copper smelter.
NNT had said in September that it would supply its copper concentrate to Freeport Indonesia’s smelting facility. The government, though, asked Newmont to explore the possibility of building its own copper smelter. NNT had deposited $25 million as collateral for its commitment to domestic refining.
“If Freeport has signed the MoU [memorandum of understanding], we are very grateful. Because of this, we hope that Newmont could continue its operation, too,” said Ruslan Ahmad, NNT’s general supervision site communication, in Batu Hijau on Friday.
In early June 2014, NNT declared force majeure as supply of its ore increased in compliance with the 2009 Mining Law in Indonesia. Based on the law from January 2014 a ban on ore exports was implemented, and mining companies were required to raise the value of their products by processing their mineral ore before shipping.
The move halted mining activity at NTT’s site in Batu Hijau and caused the company to furlough 80 percent of its 4,000 employees. The employees were sent home temporarily and despite being paid while staying home, they were left without any security that the company will survive.
Ruslan said that Newmont fully supports the idea of having smelters in Indonesia, but he said the company can’t build its own smelter due to its inconsistency of concentrate production and the lack of infrastructure in Batu Hijau.
“We are ready to support. The proof is the $25 million guarantee,” Ruslan said.
“If someone said that we are depending on Freeport [to build the smelter], that’s true. Apart from Freeport, we also are encouraging two other companies, such as Nusantara Smelting and Indosmelt, that have declared plans to build smelters,” Ruslan said, referring to smelters being developed by the local companies.
Ruslan said the company is keeping its employees updated on a daily basis to keep them focused on work. He also said that NNT asked employees to save on their budgets and to make priorities.
“We hope that before the six-month permit limit we can [secure the extension], and we remain optimistic,” he said.
GlobeAsia
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