Newmont not subject to "overburden" tax

The working contract issued to PT Newmont Minahasa to explore and produce mineral reources in North Sulawesi does not require the company to pay tax on the overburden it digged up from the ground when conducting exploration activities, according to a senior official at the Ministry of Mines and Energy.

Surya Djayadiningrate, an expert on environment at the ministry, said in Jakarta on Thursday that the overbuden had no commercial contents and it is therefore not categorized as the C class mineral resources demanded by the Minahasa government.

He said that the mining company used the overburden to cover old mining sites not for commercial purposes, while the C class mineral resouces are related to those which have commercial means such as sand. "It is therefore strange if the local administration required the company to pay tax over such an overburden."

The administration of the Minahasa regency recently sued Newmont for not paying the tax on the materials it digged up from its mining sites. According to the local government, the overbuden is part of the C class mineral resources, which is subject to tax payment. This kind of tax is imposed by a regency in the country as one of its income sources.

The Minahasa government won the Rp 100 million suit and Newmont, which opposed the court decision, appealed to the higher court. The company's mining activities have been halted awaiting for the appeal decision (*).