Bambang Gatot, the Director General of the Ministry of energy and mineral resources’ Coal and Minerals department in Indonesia said recently that Newmont Mining Corp (NYSE:NEM) is on time crunch in renewing its new export permit here. The mine ministry officer said that the U.S. miner needs to submit its official progress report to the Indonesian Government regarding its further course of action for developing domestic smelter. Until then, the company’s permit for Indonesian copper export shall not be renewed.
A blow to Newmont if the license doesn’t get renewed
If Indonesia doesn’t renew the export permit for the U.S. miner, it would be a real blow to the company since it is the second largest miner of Indonesian copper. In 2014, the company had signed an accord with the Government of Indonesia in order to develop its domestic facilities there for local mineral processing. The agreement was a solution to halt the tax dispute that stretched for 8 months and disrupted exports.
Throughout August 2015, there had been a range of output cuts in the mines because of the prices being stalled at 6-year lows. A continued stop of copper export from the company was the only way to help the support price.
While talking to Reuters, the Indonesia official said that Newmont did not submit to the Government, its smelter progress, which is why there has been a halt in new permit. He added that if the company fails to submit this report, it will not get recommendation for a new export license.
Before a new license is being issued to Newmont Mining Corp (NYSE:NEM) by the Ministry of Trade, the company needs to seek approval from the Ministry of energy and mineral resources.
Indonesian export policy regarding copper mining
In order to promote the development of smelters at the domestic market, the Government of Indonesia had levies bulkier tax on the miners in January 2014. This drove much higher returns to the Government from the mineral resources. The Government of Indonesia speculates Newmont to produce as high as 500,000 tonnes of gold and copper concentrate in this year, at the most. In 2014, it produced 400,000 tonnes of this concentrate.
