T

he government has asked copper miner PT Newmont Nusa Tenggara (NNT) to show its commitment to complying with the new Mining Law, before letting the firm resume its copper exports, despite the mining giant'€™s decision to withdraw its arbitration appeal.

NNT, a subsidiary of US-based Newmont Mining Corp., said late on Tuesday that it had decided to withdraw its arbitration appeal at the International Center for Settlement of Investment Disputes (ICSID) against the Indonesian government'€™s ore export ban.

It said the withdrawal decision was made as the government had promised to reopen negotiations with the company.

Although the announcement was made public through an official statement on its website, the company had not yet officially informed the government of the withdrawal.

'€œI'€™ve heard the news [of the arbitration withdrawal]. However, we haven'€™t received any evidence,'€ Energy and Mineral Resources Minister Jero Wacik explained on Wednesday.

NNT filed the arbitration appeal in July after the company had to cease its production as its copper concentrate exports were halted due to Indonesia'€™s ore export ban, which commenced on Jan. 12. The company also said the ban had violated its contract of work (COW).

The government deplored the arbitration appeal, particularly because the legal suit was put on the table when the renegotiations of NNT'€™s COW were ongoing.

Coordinating Economic Minister Chairul Tanjung said the arbitration appeal showed NNT was not acting in good faith with Indonesia after years of cooperation.

The government adopted an aggressive stance on the NNT arbitration, including a plan to file a counter arbitration appeal at a different court.

The preparation of a legal team to fight NNT has also been performed. The Finance Ministry has issued a regulation on hiring legal consultants to challenge the arbitration.

'€œThe regulation lays out how to obtain the best lawyers. However, we'€™re still unsure about the current developments. It will be good if the arbitration is withdrawn,'€ Finance Minister Chatib Basri said, admitting that NNT had not sent an official note to the government.

The government is in talks with mining companies to renegotiate a number of issues in COWs and adjust them to the new 2009 Mining Law.

The renegotiation covers six main issues: adjustments in royalties, divestment, mining size, continuity of operation post contract expiry, an obligation to process and refine minerals in domestic facilities, as well as the obligation to use local goods and services.

The renegotiations with Newmont were immediately halted following the filing of the arbitration.

The process would be resumed only after NNT officially informed the government of its withdrawal, the Energy and Mineral Resources Ministry'€™s director general for minerals and coal, R. Sukhyar, said on Wednesday.

'€œIn previous talks, the government and NNT have not reached agreement on a number of issues, including the increase in royalties and clarity over its plan to supply concentrate to Freeport Indonesia'€™s smelter,'€ Sukhyar said.

A surety bond of US$25 million, as previously promised, is also required, as a guarantee that NNT is serious about the construction of a smelter.

NNT'€™s exports will be resumed if the company and the government reach a deal on a memorandum of understanding (MoU) highlighting the principles for COW amendment.

'€œThe signing of an MoU with the government would be followed by the safe ramping up of copper concentrate production and exports from Batu Hijau,'€ NNT said in a statement.

If the company concludes the MoU this September, it will have an export quota of 270,000 tons of copper concentrate until December, according to Sukhyar.