Newmont to increase Batu Hijau copper output

The Batu Hijau mine, Asia's second-largest copper miner, will increase output of copper in concentrate by between 2.5 and 10 percent this year, a spokesman for the company's U.S.-based parent, Newmont Mining Corp was quoted by Reuters as saying Friday.

Doug Hock said Batu Hijau estimated output at between 650 million and 700 million pounds (295,000 to 317,000 tons) of copper in concentrate this year, compared to 634.12 million pounds in 2003.

"The mine is operating at full capacity," Hock said in a written reply to questions.

Asia's largest copper miner, Freeport McMoRan Copper & Gold Inc's Grasberg mine in Indonesia's Papua province, reduced its 2004 output forecast for the mine to 1.0 billion pounds (453,000 tons) of copper in concentrate from 1.4 billion pounds after a rock slide in December.

Batu Hijau, on Indonesia's Sumbawa island, sells most of its copper concentrate on a long-term contract basis. Hock said the mine's main markets included Asia, Europe and Australia.

He said it was too early to say whether the company would have any copper concentrate to sell in the spot market this year.

"Like any mine, there is a small tonnage kept uncommitted for production swings that might occur during the year. We do not know at this moment, however, whether we will have tonnage for spot sales," he said.

Workers at Batu Hijau held a peaceful 13-hour strike over pay issues last week, but production was largely unaffected. Newmont said on February 6 the pay issues had been resolved.

COPPER CONCENTRATE SHORTAGE

Supply of copper concentrate in Asia is extremely tight this year after production difficulties at the region's largest copper miners.

In addition to Freeport's cuts, Ok Tedi Mining Ltd in Papua New Guinea said on January 27 it expected to lose around 40 percent of copper concentrate output for eight to 10 weeks after a mechanical failure at one of its mills.

Ok Tedi, owned 18 percent by Canada's Inmet Mining Corp, produced around 675,000 tonnes of copper concentrate in 2003, yielding around 200,000 tonnes of copper metal.

At Batu Hijau, Newmont holds a 45 percent equity interest through a partnership with an affiliate of Japan's Sumitomo Corp, which itself holds a 35 percent stake, Hock said.

The remaining 20 percent is a carried interest held by PT Pukuafu Indah, an unrelated Indonesian company.

Hock added 56.25 percent of Batu Hijau's output is attributable to Newmont, although this would fall to 52.875 percent this year in recognition of a six percent net economic interest held by PT Pukuafu Indah.

Batu Hijau will begin paying dividends in 2004 as a result of higher metal prices and improved operating and financial results, Newmont said in its 2003 year-end earnings release.

Benchmark three-month London Metal Exchange copper soared to a seven-year high of $2,705.50 on Thursday. The metal was trading lower in Asia by 0500 GMT on Friday, at $2,680/2,683 a ton. (*)