PTNNT plans to ramp down production

PT Newmont Nusa Tenggara (PTNNT), a local unit of US-based Newmont Mining Corp, announced Wednesday that the Batu Hijau copper and gold mine on Sumbawa Barat is expected to ramp down production on or about June 1, unless ongoing discussions with the government lead to completion of the process to secure an initial export permit.

In April, PTNNT obtained registered exporter status from the Ministry of Trade, a necessary milestone prior to receiving the export permit, the company said in a statement.

Batu Hijau?s copper concentrate storage facilities will reach capacity in late May, requiring an orderly ramp down of operations. Once the mine?s copper concentrate storage is filled, PTNNT will move to cease mining and milling, along with significantly scaling back contracted services, purchasing, and capital expenditure, with corresponding adjustments in employee work schedules and reductions in overtime, the company explained.

To minimize expenses and preserve the ability to return to normal operations in a timely fashion, most of PTNNT?s employees would be placed on leave at reduced pay starting in early June. The mine will maintain appropriate controls to protect the safety and security of people, water resources and the environment, it added.

?We support the Government?s stated goal of increased domestic processing and continue engaging with the government to resume exports and protect the existing jobs, local businesses and government revenues supported by the export and sale of Batu Hijau?s copper concentrate,? said Martiono Hadianto, PTNNT?s President Director.

?While our Contract of Work explicitly guarantees our right to export copper concentrate and establishes all the taxes and duties PTNNT is required to pay, we have taken numerous steps to support the government?s desire to increase in-country smelting. This is a very unfortunate and difficult situation for all of us, as it will disrupt the lives of our 8,000 employees and contractors and impact thousands of more people in the Sumbawa Barat area who derive their incomes from our operation.?

While Batu Hijau will continue shipping and selling copper concentrate to PT Smelting in Gresik, Indonesia, through the remainder of 2014, the smelter has capacity limitations and cannot purchase sufficient quantities of PTNNT?s copper concentrates to allow for ongoing normal production at Batu Hijau.

Following the introduction of mineral ore export ban policy on January 12, the government imposed tighter export restrictions for mineral concentrates including requiring miners to obtain export recommendation from the Ministry of Energy and Mineral Resources (MEMR). One of the requirements to be able to obtain this recommendation is that miners must show commitment to develop domestic smelters and put down a deposit worth 5 percent of total investment for the smelters.

The export recommendation from the MEMR is necessary to allow miners such as PTNNT and PT Freeport Indonesia to resume copper concentrate export.

Editing by Reiner Simanjuntak