AMNT to invest $9b in smelter, mine development projects

Courtesy of Medco

Gold and copper mining firm PT Amman Mineral Nusa Tenggara (AMNT) plans to invest a total of US$9 billion to finance the development of copper smelter and mines.

Director General of Mineral and Coal at the Ministry of Energy and Mineral Resources Bambang Gatot Ariyono said on Wednesday the company has submitted to the ministry its long-term investment plan, which will be realized starting this year.

He said that the smelter project will cost about $1 billion, while the remaining $8 billion will be used to finance mine development and facility to process ores into concentrates.

He said that AMNT, formerly known as PT Newmont Nusa Tenggara, plans to develop a copper smelter in Sumbawa, West Nusa Tenggara Province, with a capacity of 1 million ? 1.5 million tons of copper concentrates per year, enough to refine the entire copper concentrates output of the company.

He added that the smelter project is targeted to be completed within five years, or in 2022, in line with the deadline set by the government for a complete ban of export of mineral concentrates.

The government in January of this year introduced a new mining policy allowing miners to continue export of mineral concentrates including copper concentrates for another five years but under certain conditions including converting their mining permits status from mining contract of work (COW) to special mining business license (or IUPK), and commitment to develop domestic smelter.

AMNT in February obtained a one year permit to export copper concentrates with an export quota of 675,000 tons following conversion of its COW into IUPK. The government has said it would conduct audit of the smelter project every six months, and miners which fail to show significant progress in the smelter project could risk their export permit revoked.

Bambang said that the investment plan made by AMNT highlights investors confidence in the country?s mining sector following the introduction of the new mining policy.

The government is currently engaged in a dispute with gold and copper giant PT Freeport Indonesia over the new policy. PT Freeport, a subsidiary of US-based Freeport McMoRan Inc, while agreeing to convert its COW into IUPK, has demanded for the IUPK to have similar fiscal (nailed down tax principle) and legal terms as those set in the COW regime to help ensure investment stability. The request has been rejected by the government. The company has threatened to go to international arbitration if ongoing negotiation process fails to reach win-win solution.

Elsewhere, Bambang said that in terms of mine development, AMNT will allocate part of its investment plan for the phase seven development of the giant Batu Hijau mine in Sumbawa. The company also plans to continue exploration activities at the Elang block and other blocks. (*)