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T Newmont Nusa Tenggara has finally reached a contract renegotiation deal with the Indonesian government and is set to sign a memorandum of understanding (MoU) on Wednesday that will allow the miner to resume copper shipments from the country.

The deal will pave the way for Newmont, a subsidiary of US-based Newmont Mining Corporation, to export 270,000 tons of copper concentrate that it has targeted to ship this year.

'€œWe have reached an agreement with the government [the Energy and Mineral Resources Ministry], and we will sign an MoU to proceed with our export recommendation letter,'€ Newmont president director Martiono Hadianto said on Tuesday.

'€œOnce the recommendation letter is issued and filed at the Trade Ministry, we will be able to carry on with our exports,'€ he said.

The government halted the contract renegotiation with Newmont in July after the copper miner filed an arbitration appeal against the government'€™s ore export ban. The ban, an implementation of the 2009 Mining Law, came into effect on Jan. 12, 2014.

The Energy and Mineral Resources Ministry'€™s director general for minerals and coal, R. Sukhyar, said after a brief meeting with Martiono that Newmont had agreed on the principal terms of the contract renegotiation and to comply with the government'€™s requirements, including to pay a surety bond amounting to US$25 million as a guarantee that the company is serious about the construction of a smelter.

'€œNewmont has agreed on six main issues under the mining contract renegotiation. We will pass this agreement to Deputy Energy and Mineral Resources Minister [Susilo Siswoutomo] as the head of the renegotiating team, who will further forward it to Coordinating Economic Minister [Chairul Tanjung] to grant approval,'€ he said.

'€œWe expect to ink the MoU with Newmont tomorrow [Wednesday] if all the bureaucratic procedures are completed. Once the MoU is signed, we will issue the export recommendation letter and Newmont can resume shipments this week.'€

The government is in talks with mining companies to renegotiate a number of contract of work (COW) issues and to adjust them to the 2009 Mining Law.

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

The contract renegotiation will require Newmont to reduce its mining concession area from 87,000 hectares to 66,442 ha. Newmont will also be obliged to have its royalty payment increased from 1 percent previously to 4 percent for copper, 3.75 percent for gold and 3.25 percent for silver.

To have its ore processed, Newmont will send its production to smelters set to be built by Freeport Indonesia, the local arm of US mining giant Freeport-McMoRan Inc., which had its contract renegotiated in July and has agreed to cooperate with Newmont in smelter investment.

Newmont, which ceased operations at the Batu Hijau mine in West Nusa Tenggara following the ore export ban, decided to withdraw its arbitration appeal with the International Center for the Settlement of Investment Disputes (ICSID) last week. The company said the withdrawal was made as the government had promised to reopen negotiations with the company.

The arbitration appeal, which led to strained relations between the government and the company, was made as Newmont argued the regulation and the contract renegotiation had cost it dearly.

The government has in fact relaxed the ban slightly by allowing exports of semi-finished products, such as concentrate, until 2017, subject to export duties.