Jakarta. Indonesia’s Energy and Mineral Resources Ministry says it will not extend the six-month memorandum of understanding on contract amendments with Newmont Nusa Tenggara, the local unit of US mining giant Newmont Mining.
But R. Sukhyar, the ministry’s director general of coal and minerals, indicated that the contract amendment process would continue despite the decision to not renew the memorandum of understanding.
Sukhyar said the decision was made by both the government and Newmont Nusa Tenggara (NNT).
“Today’s discussion was held between us and NNT’s legal division. We agreed that there would be no MoU extension,” Sukhyar said in Jakarta on Tuesday.
The director general said the ministry wanted to avoid controversy surrounding the MoU renewal.
“We don’t want to be trapped in a deadline for the MoU. Besides, renewing the MoU could result in public criticism,” Sukhyar said.
Freeport Indonesia, the local unit of US mining giant Freeport-McMoRan, secured a six-month extension of its export permit in January, after the company rented land in Gresik, East Java, on which it said it planned build a copper smelter.
“The [MoU extension] with Freeport was already done,” Sukhyar said.
He said the ministry hoped to speed up the process of contract amendment with NNT without the memorandum of understanding.
The ministry, he added, presented the draft of the contract amendment to NNT and that the mining company is currently reviewing it.
“Our target is that the amendment can be finalized in April,” Sukhyar said.
NNT spokesman Ruby Purnomo said the contract renegotiation had already been discussed with the government and that the company would continue with these discussions.
The six-month memorandum of understanding between the government and NNT was signed on Sept. 3 last year and it expired on Tuesday.
The agreement contained six points such as the requirement to build a smelter, reducing the scope of the mining site, changing the contract renewal into a special mining business permit (IUPK), increased royalties to the state, business divestment, and for NNT to use domestic mining goods and services.
Sukhyar said the miner was committed to building a smelter in cooperation with Freeport Indonesia.
He added that such a move was not against the law, saying that miners were allowed to either build their own smelters or cooperate with third parties.
Sukhyar said that NNT had signed an agreement with Freeport Indonesia on smelter cooperation but that it would expire on March 30.
“We want [NNT] to not only renew the MoU, but to also increase its funding contribution for the smelter development,” he said.
Sukhyar told a press conference on Monday that the ministry would not renew NNT’s copper export permit unless it signed an agreement with Freeport Indonesia to invest in the smelter.
“For an export permit extension for Newmont, we’re still awaiting an agreement between Freeport and Newmont,” Sukhyar was quoted as saying by Reuters on Monday.
“It will depend on the seriousness of Newmont’s commitment to cooperate with Freeport and how much they will contribute are the investment,” Sukhyar said.
NNT submitted a request for extending its gold and copper concentrate export permit to the government last month.
The miner submitted the request letter on Feb. 11 to the director general of mineral and coal at the Energy and Mineral Resources Ministry, a week before the Feb. 18 deadline.
Coming to Terms? Miner foregoes re-up on September’s stop-gap deal; ministry amending contract
Newmont Nusa Tenggara’s massive Batu Hijau copper mining pit on the southwestern tip of the Indonesian island of Sumbawa in West Nusa Tenggara.
Bloomberg Photo/Jonathan DrakeWe don’t want to be trapped in a deadline for the MoU. Besides, renewing the MoU could
result in public criticism