Exclusive: Newmont to close down greenfield exploration

Copper and gold mining firm PT Newmont Pacific Nusantara plans to conclude its greenfield exploration (preliminary geological mining survey) in Indonesia due to the lack of clear legal framework and mining investment policy.

Greenfield exploration is a preliminary survey to spot potential mining prospects.

The plan is revealed in a February 7 letter signed by company president Richard B. Ness to Minister of Mineral Resources and Energy Purnomo Yusgiantoro, a copy of which is obtained by Petromindo.com.

"The primary reason for this decision is not the widely publicized political risk and security condition but stems from the basic fact that there is no clear legal framework and mining investment policy," Ness said.

He pointed out that the regulatory framework that was supposed to guide the implementation of regional autonomy with regards to mining investment did not exist.

He said that more troubling was the current draft of the new mining law was "non-bankable" nor were the current tax and royalty rates competitive in the world market place amid the current period of depressed metal prices.

"Without our bank's support and the ability to bring in new or additional debt financing under existing regulations, should we be successful in even finding a mineralized deposit, further greenfield exploration efforts can not be justified to our shareholders," Ness said.

But Ness added that Newmont would continue to operate its existing mines within Indonesia.

Currently Newmont operates gold mining in North Sulawesi (Newmont Minahasa Raya), gold and copper mining in West Nusa Tenggara (Newmont Nusa Tenggara) and holds gold exploration contract of work in North Sulawesi (Newmont Mongondow Mining). (Alex)