Teck outlines detailed strategy for copper growth
The company plans to invest $3.2 billion to $3.9 billion over four years to develop four key projects.
Newmont’s Batu Hijau copper mine.
Indonesia increased pressure on Newmont Mining (NYSE:NEM) over a six-month old dispute that has halted copper exports, demanding the US miner to withdraw an international arbitration request filed earlier this month or risk losing its mining license.
According to Sukhyar, director general of coal and minerals at the mining ministry, the government is planning to send a letter to the Colorado-based miner saying that it has defaulted on its contract, Dow Jones Business News reported Thursday.
The Indonesian authority, who goes by one name, added the default is due to the production freeze, which would allow the outgoing government to say the firm is “negligent.”
If Newmont’s license is revoked, the country will open up bids for the miner’s Batu Hijau copper operation, which has been halted since early June, when the firm declared force majeure. Thousands of its employees have been placed on leave at reduced pay.
The US miner decided to file the arbitration lawsuit seeking interim, injunctive relief to resume exports of copper concentrate, despite a recent move by Indonesia to draw up a new mining export tax that will more than halve the base rate to be paid by miners.
Both Newmont and fellow US miner Freeport-McMoRan Copper & Gold (NYSE:FCX), which account for 97% of nation’s copper output, have previously argued they should be exempt from the tax, which kicks in at 25% and rises to 60% in the second half of 2016, before a total concentrate export ban in 2017.
Last week Freeport managed to reach a preliminary deal over its copper exports with the Asian nation authorities.
Newmont, in turn, is allegedly stepping up efforts to return to the negotiation table, which may include lifting its international arbitration request, Xinhua reports.
The tax on concentrate exports is part of the outgoing government’s drive to force miners to build smelters and processing plants in Southeast Asia’s largest economy.
Image by Iso1600 | Wkimedia Commons
9 Comments
Jack de la Vergne
Newmont has grit; Freeport is a gutless sycophant.
Firdaus Abbasi
I am a Newmont fan but like Freeport that at times one has to lunch with the devil. Who knows the secrets of Mary Magdalene? So Jack, be magnanimous.
Matt
Huh Jack…..please remember we are all guests in countries where we go to mine and make money. You have to adapt and the world is a changing place. It will work as long as the playing field is level for all.
Aurum Minerali
From an outside perspective, this really looks like an all out effort to take over these operations. They are asking mining companies to continue to operate, but not sell their product – that is an impossible situation. The majors may want to build a smelter in country, but it costs billions and takes years to do so. And with these actions, why would a company consider spending more capital, just to have the government steal their brand new, 2-4 billion dollar smelter – in addition to the mines and other investments? It sure looks like theft in the name of keeping more profits and jobs within Indonesia.
Mark
The situation is what it is, there is always a possibility that a sovereign nation can change the rules mid game. “fair” is not the issue, it is just another negotiation and an advertisement to change the global risk analysis for that region. All involved parties are fully aware what the stakes are. It was the “surprise” that really clarifies the that there are hidden downsides, note taken. The parties are at the table, not so much with lawyers, but with calculators.
Good, Bad and Ugly
It is still blackmail, and the next step, usually by the socialists,. is nationalisation.
Rahmawan Helmi
Homework for The NEW PRESIDENT of Indonesia
Mike Failla
What part of blackmail is not being understood here?
Ian
These companies have been raping and pillaging these 3rd world country’s for years. Now they say enough is enough and build your plants here for our people to be workers, these company run and say it is to hard and our bottom line. Freeport has made a killing for years as has Newmont.