Newmont declares force majeure, to cut salary

PT Newmont Nusa Tenggara (PTNNT), a subsidiary of American mining giant Newmont Corp, has officially declared force majeure on its Batu Hijau copper and gold mine in Sumbawa Barat and planned to send its workers home and cut their salaries, as a consequence of the government?s ban on its copper concentrate exports.

The firm said in a statement obtained on Thursday that ?the force majeure notice was line with the Contract of Work since the export ban has made the firm unable to carry out production activities.

In order to reduce costs and maintain the ability and readiness of the company to resume operation in the future, around 80 percent of its 4000 employees will be placed in ?stand-by status? with salaries cut as of June 6, 2014. The government will continue talks with the government to find a solution to the export problem, the firm said.

?We have taken various measures and efforts to help solve the export problem and support the government?s policy in promoting processing and refining activities domestically. Still, despite all our best efforts, the company is still unable to carry out copper concentrate exports since last January and unable to receive export permits. Besides, the new export regulation -- the imposition of export tax and export ban -- which will be effective since January 2017 will have a great impact on the economics of Batu Hijau operation and are in conflict with the Contract of Work.

?As such we don?t have any other options but declaring force majeure,? PTNNT?s President Director Martiono Hadianto said.

?We hope continued dialog with the government will lead to a solution to the problem in the not-too-distant future. In order to protect jobs and the rights and interest of stakeholders, we respectfully ask the government to allow PTNNT to resume operational activities normally and export copper concentrates in line with terms in the Contract of Work,? Martiono added.

The Batu Hijau mine will be in a status of maintenance and the company will keep the control of operation and protect the security and safety of workers, water resources, environment. The firm will continue selling copper concentrate to PT Smelting in Gresik, East Java through the rest of the year. A total of 81,000 tons of concentrate will be delivered to PT Smelting from now to the end of the year. PT Smelting has a limited a capacity to buy all copper concentrate produced by PTNNT to allow it to operate normally.

Editing by Johannes Simbolon