PT Newmont Nusa Tenggara (NNT) has reduced its annual output estimate by up to 2 percent for the next five years, after its operations were suspended for three weeks following the collapse of a pit wall.
"We estimate the production output target will be corrected by between 1.5 and 2 percent per year in four to five years," NNT spokesperson Rubi W. Purnomo said via text message on Wednesday.
NNT's parent company, US mining giant Newmont Corp, announced on Sept. 22 that operations at its Batu Hijau mine had been suspended because of "a geotechnical failure" in the west wall of the mine. The company said it would continue to process lower-grade ore from stockpiles.
The Batu Hijau mine produces gold and copper concentrate and is the second-largest copper mine in Indonesia.
Earlier in February Newmont announced that the Batu Hijau mine could produce 455 million pounds (206,385 metric tons) of copper and 486,000 ounces of gold in 2009.
Bambang Setiawan, the director general for coal, minerals and geothermal energy, under the Energy and Mineral Resources Ministry, estimated that the total output correction would reach 7 percent within five years.
"The output correction is not significant. The state revenue from NNT will not necessarily decrease because it will also be influenced by the price of copper," Bambang said.
Activity at Batu Hijau resumed Sunday, Rubi said. Bambang, however, estimated it would take five months for the company to get back to normal.
"NNT must redesign the mine and obtain a new permit based on an environmental impact analysis," Bambang said.
NNT is currently 45 percent owned by Newmont, 35 percent by Sumitomo Corp and 20 percent by PT Pukuafu Indah. The ownership is subject to change as demanded by a contract between Newmont and the government.
Based on a 1986 contract, Newmont must gradually sell a total of 31 percent of its foreign-owned stakes in NNT to the government or to local parties designated by government.
The central government has said it would appoint state enterprises to help manage the acquisition. However, if the lead acquisition is taken by the regional administration, it will likely be financed by PT Multicapital, a unit of PT Bumi Resources.
A consortium comprising West Nusa Tenggara provincial administration, Sumbawa regency and West Sumbawa regency administrations have chosen PT Multicapital to finance the acquisition of another 10 percent stake in NNT, worth $391 million.
The central government and West Nusa Tenggara provincial administration are also in negotiations for the acquisition of another 14 percent stake in NNT.
