Govt ready to fight Newmont lawsuit

The government said it was ready to deal with the international arbitration filed by gold and copper giant PT Newmont Nusa Tenggara (PTNNT), which is seeking to challenge a six-moth old policy imposing tighter restriction on mineral concentrates export.

Minister of Energy and Mineral Resources Jero Wacik told reporters on Thursday that the government has reputed lawyers to face Newmont at the court, adding that the case would be handled by Minister of Law and Human Rights Amir Syamsudin.

Jero also said that the government regretted the legal move made by PTNNT, a local subsidiary of US-based Newmont Mining Corp, as both sides were still in negotiation process to seek ways for the company to be able to resume export of mineral concentrates.

?This is about defending the sovereignty of the state. We do not like to be pressured by Newmont?s threat of arbitration," Jero said, adding that PTNNT must follow laws in Indonesia.

PTNNT announced Tuesday that together with its majority shareholder Nusa Tenggara Partnership BV, a Dutch entity, the filling of international arbitration against the government of Indonesia with Washington-based International Centre for the Settlement of Investment Disputes (ICSID) to seek relief from the export restrictions.

The government introduced a ban on mineral ores on January 12 of this year as mandated by the 2009 Mining Law in a bid to push miners to build domestic smelters to generate greater value from mining products for the country. But certain mineral concentrates including copper are still allowed to be exported until 2017 as long as the miners meet requirements set by the government including having domestic smelter plant in place and paying export tax.

PTNNT and other miners have protested the punitive export duty on mineral concentrates, arguing that their existing mining contract does not acknowledge the export duty.

The government has recently imposed additional requirement for miners to be able to obtain export approval including concluding the protracted mining contract renegotiation with the government.

Since the tighter export restriction, PTNNT has been unable to export copper concentrates, prompting the company to declare a force majeure last moth, and suspend its operation at the Batu Hijau mine.

Jero said that PTNNT has declined to agree with part of the six main points of contract renegotiation proposed by the government particularly with regards to the proposed 3.7 percent royalty for gold and four percent for copper.

PTNNT is 56 percent owned by Nusa Tenggara Partnership BV, which is controlled by Newmont Mining Corp and Nusa Tenggara Mining Corporation of Japan. The remaining shares are held by PT Pukuafu Indah holding (17.8 percent), PT Multi Daerah Bersaing (24 percent) and PT Indonesia Masbaga Investama (2.2 percent). (*)