Newmont nears deal with Freeport on smelter project
Thursday, March 12 2015 - 02:07 AM WIB
Minister of Energy and Mineral Resources Sudirman Said was quoted as saying the two companies were ironing out the details of the agreement.
?The plan is a requirement for an extension of Newmont Nusa Tenggara?s export permit. They are close to closing the deal,? Sudirman said as quoted by The Jakarta Post.
The export permit is necessary for Newmont Nusa Tenggara to continue selling its copper concentrate overseas. Following the implementation of the ban on mineral ore exports last year, the government allows just semi-finished minerals, such as copper concentrate, to be sold abroad until 2017. However, permits are only given to mining firms committed to processing domestically, or those that have shown progress building a domestic smelter or supporting facilities.
Newmont Nusa Tenggara?s permit is set to expire next week.
The ministry?s Director General for Mineral and Coal, R. Sukhyar, said clarity on the nature of the cooperation was a key.
?I invited the CEO of Freeport [parent firm of Freeport McMoRan Inc.] and Newmont [for a talk]. Newmont?s CEO said the company was ready to share in capital expenditure [for the smelter development],? Sukhyar said.
He added that Newmont Nusa Tenggara would likely be a junior partner in the agreement, with a 25 percent stake in the smelter, while Freeport Indonesia would be the majority shareholder.
As a result of the 2009 Mining Law, Freeport Indonesia is currently planning to build a new copper smelter in Gresik, East Java, with an investment of US$2.3 billion. Under a previous plan, Newmont Nusa Tenggara was set to process its own copper concentrate using the Freeport smelter after calculating that constructing its own smelter would be too costly.
Newmont Nusa Tenggara has also reportedly been in talks with other investors planning to build smelters in the country.
Newmont Nusa Tenggara president director Martiono Hadianto declined to reveal details of the company?s planned cooperation with Freeport Indonesia.
?The important thing is this is a partnership. Regarding the form of the partnership, it will depend on the development [of the discussion with Freeport],? he said after paying a visit to Vice President Jusuf Kalla on Wednesday.
Martiono was accompanied by the CEO of his company?s parent firm, Newmont Mining Corp. in his meeting with the Vice President.
Kalla described the meeting as a courtesy visit.
Apart from trying to secure the export permit through a transparent cooperation with Freeport Indonesia, Newmont Nusa Tenggara is also working with the Energy and Mineral Resources Ministry on the drafting of an amendment of the company?s contract of work to conform with provisions under the 2009 Mining Law.
The amendment will cover six main issues; adjustment in royalty payments; size of mining area; continuity of operations; divestment; obligation for domestic mineral processing; and obligation in the use of local services. (*)