Newmont says oil prices will hurt profits at Indonesian mine: Report

U.S. mining giant Newmont said Friday that rising oil prices will increase costs by as much as $30 million at its massive copper and gold mine in Indonesia, The Associated Press reported.

"You better believe that fuel prices cut into our operating profit," said Phil Brumit, the general manager at Newmont's mine on the Indonesian island of Sumbawa. "Next year, the losses will be substantially more."

Denver-based Newmont on Thursday reported that second-quarter profit rose 35 percent to $50 million based on the strength of rising gold prices.

In the April-June quarter, Newmont Mining Corp. reported net income of 11 cents per share, up from $37 million, or 8 cents per share, in the previous second quarter. Analysts surveyed by Thomson Financial had predicted earnings of 17 cents a share.

But the company also reported that output at some of its mines ? including its Batu Hijau facility in Indonesia had fallen compared to a year ago and that production costs overall had climbed 8.4 percent to $244 an ounce.

The company also reported that its net income was hurt by a number of factors, including the $8 million it spent defending itself over alleged pollution at one of its mines on the island of Sulawesi.

The company's local unit, Newmont Minahasa Raya, and its chief executive in Indonesia, American Richard Ness, go on trial Aug. 5 for allegedly polluting the environment and sickening villagers near its gold mine on Buyat Bay on Sulawesi island.

The government also has filed a $133.6 million civil lawsuit against Newmont in connection with the same mine.

Newmont also has had trouble at its mine in Batu Hijau, reporting that applicable to sales per pound of copper and per ounce of gold each increased 18 percent during the second quarter due primarily to lower production and increased maintenance, consumable and labor costs.

Access to ore was also temporarily restricted due to a several pit wall slides. (*)