Boston, MA 08/28/2014 (wallstreetpr) – Indonesia is looking up for copper miners such as Freeport-McMoRan Inc (NYSE:FCX) and Newmont Mining Corp (NYSE:NEM) to extract a deal on the concentrate supply for scheduled smelter before the latter can start up with exports.
Exports to Resume The U.S.-based Newmont, is at present, operating its
Batu Hijau copper mine on the remote island Sumbawa. It retracted its hands from the international arbitration filing against the Government of Indonesia this week, which gave signs that the 7-month long dispute which had curtailed exports, might settle down finally.
Background of the Dispute
Newmont Mining Corp (NYSE:NEM) had, in the month of June 2014, declared force majeure at the mine in Indonesia and had also filed arbitration in July 2014. The company has been on different lines with the Indonesian government in light of imposition of export tax in January. The U.S. miner said that this tax was in conflict with the mining contract.
Statement from the Indonesian Officials
The Director General of Coal and Minerals, Mining Industry of Indonesia, Sukhyar said, “They both have to sit together. We are asking for their (Newmont’s) certainty in working with Freeport.”
Without elaborating much, he also added that the Government recognized that smelter plan of Freeport also includes concentrates from Newmont. “So I’ve asked them to meet again to confirm this (plan),” he added.
Tax: An Action which could Compel Miners to Develop Local Processing Facilities
The tax, which is in dispute, is seen as a plan of the Government to compel miners in developing facilities within the country for local mineral processing. This would help Indonesia in bringing larger returns to the country from mineral resources.
Freeport and Newmont Argued Exemption of Tax in Past
It is important to note that Newmont Mining Corp (NYSE:NEM) and Freeport-McMoran Inc (NYSE:FCX) together hold 97% share of the copper output of Indonesia. Both these companies had argued that they should be exempted from the export tax. However, the Indonesian unit of Freeport carried on with the exports earlier in this month after it was granted discount on the tax rate under a few terms and conditions. The MoU was signed between Freeport and the government of Indonesia in July 2014 to get discounts only on condition that it would build smelter.
