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Locals feeling squeeze after mining shutdown
Slowdown: Vendors offer an array of staple goods and foods at the Maluk market in West Sumbawa, West Nusa Tenggara
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span class="inline inline-center">Slowdown: Vendors offer an array of staple goods and foods at the Maluk market in West Sumbawa, West Nusa Tenggara. The market, which is managed by mining company PT Newmont Nusa Tenggara, is suffering financially due to the mining company's decision to halt all activity and lay off 3,200 of its employees at the nearby Batu Hijau mine. JP/ Jerry Adiguna
The local unit of US-based Newmont Mining Corporation's decision to declare force majeure and halt operations at its Batu Hijau copper mine in Sumbawa, West Nusa Tenggara has begun to affect the lives of local residents.
About 3,200 workers have been dismissed by the company since it stopped mining copper due to a steep government export duty. Some of the laid-off workers have left the area to return to their hometowns or look for jobs elsewhere.
Consequently, businesses around the mine site, which boomed when Newmont opened the mine years ago, are suffering. Local vendors who provide the daily needs of residents and the mine workers have been complaining that their profits have been falling each day.
Rented houses and other residential complexes in the area, such as the usually full Maluk village, are now vacant, abandoned by occupants who were mostly Newmont employees.
A local named Sumanto who owns Pak To restaurant in Maluk said that now his restaurant had been making less than Rp 500,000 (US$42) per day, a sharp decline from the Rp 3 million a day he was making before the mine suspended operations. Prasmanindo Boga Utama, a company that provided catering services for the mine, has also laid off some of its employees.
Abdul Gani, the manager of Gita Usaha Madani car rental company, said that almost all of his vehicles, 22 buses and nine 4x4 sport-utility vehicles usually rented to Newmont, were now sitting unused in the lot.
Gani is now in trouble as he is unable to make the Rp 300-million monthly payment on the loan he took out to buy the vehicles. 'I have been forced to dismiss more than 150 employees,' he added.
According to Newmont processing and power plant manager Ilyas Yamin, the miner had laid off more than 4,000 employees at the Batu Hijau site. Newmont declared force majeure at the mine more than a week ago.
The shutdown is also severely depressing the local economy of Mataram, the capital of West Nusa Tenggara. Rented homes, restaurants, stores and even some cafes are recording significant declines in business.
Since the government implemented a ban on the export of raw minerals on Jan. 12 in line with the 2009 Mining Law, Newmont has yet to export any of its copper concentrate. The government has since relaxed the ban on concentrates, but is imposing high duties that Newmont says violate its contract of work and make it uneconomical to export its production.
With all of Newmont's storage facilities at Batu Hijau full, the company's CEO has met with Coordinating Economic Minister Chairul Tanjung in an effort to negotiate a solution, but so far little progress has been made.
The government has promised to reduce the export duty, which is set at 20 percent this year and will increase to 60 percent during the second half of 2016, if Newmont shows its commitment to build domestic smelters as required by the law. The company has argued that building a smelter is not economically feasible. (ask)
