Indonesia sets Newmont deadline for Freeport smelter deal

Reuters – Newmont Mining Corp’s Indonesian copper export permit will not be renewed beyond March 19 unless it strikes a deal with Freeport-McMoRan Inc to invest in the latter’s planned smelter, a mines ministry official said on Monday.

Southeast Asia’s largest economy is in talks with miners about their plans to develop domestic smelting and processing facilities.

“For an export permit extension for Newmont, we are still awaiting an agreement between Freeport and Newmont,” Coal and Minerals Director General Sukhyar told a news conference.

“It will depend how serious Newmont’s commitment to co-operate with Freeport is and how much they will share the investment,” Sukhyar said.

Early last year, Indonesia put in place export restrictions aimed at forcing mining firms to develop smelting and processing facilities so that Indonesia could refine all of its raw ores and concentrates.

Although fellow U.S.-based miner Freeport is pushing ahead with expansion plans at Indonesia’s sole copper smelter at Gresik, Newmont has said multiple studies show its Batu Hijau mine cannot sustain a smelter on its own.

The Indonesian government has long urged the companies to cooperate on a smelter.

After an increasingly fractious nine-month export tax dispute, Newmont signed a deal with the Indonesian government late last year that allowed for the resumption of copper concentrate exports. This agreement is set to end unless it can show it is serious about domestic processing.

“If they really commit, they will be given an export permit extension,” Sukhyar said. “The time limit for us to give an export permit extension is March 19.”

Newmont and Freeport, which account for 97 percent of Indonesia’s copper output, could not be reached for comment on Monday. Freeport’s local CEO told Reuters last year that a new smelter would be designed only to take concentrate from its assets.

Newmont is expected to produce 500,000 tonnes of copper and gold concentrate in 2015 “at most”, up from 400,000 tonnes in 2014, Sukhyar forecast last month.