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ow that copper miner PT Newmont Nusa Tenggara has signed an agreement with the government, it expects to resume shipments soon and end an eight-month production hiatus at its Batu Hijau mine.

A memorandum of understanding (MoU) signed late Wednesday comprises several points to be included in the company'€™s amended contract of work (CoW).

The signing of the MoU was supposed to take place earlier Wednesday, but Newmont, a subsidiary of US-based Newmont Mining Corporation, had not responded to a clause aimed at ensuring the company'€™s commitment to refining mineral ores domestically.

'€œThe company, along with its parent company, has [finally] agreed on the matter,'€ Sukhyar, the Energy and Mineral Resources Ministry'€™s mineral and coal director general, said on Thursday.

Under the MoU, Newmont has in principal agreed to pay higher royalties of 4 percent for copper and 3.75 percent for gold from the current rates of 3.5 percent and 1 percent, respectively.

It also has agreed to reduce its mining size to 66,000 hectares from the current 86,000 hectares, according to Sukhyar.

Regarding the obligation to process minerals in the country, Newmont said it would not build its own smelter. Instead, the company is committed to supplying concentrate to a smelter developed by Freeport Indonesia.

To demonstrate its commitment to refining minerals domestically, Newmont is required to pay a US$25 million surety bond.

The company can start shipments only after it pays the surety bond and the Trade Ministry issues an export permit, which is pending a recommendation from the mineral and coal directorate general.

'€œI'€™m expecting to resume shipments next week. It means that we can resume production,'€ Newmont president director Martiono Hadianto said.

The government is currently struggling to renegotiate a number of CoWs and coal contracts of work (CCoWs) as mandated by the 2009 Mining Law.

The renegotiation covers six main issues, which are adjustments to royalties, divestment, the size of mining area, the obligation to process minerals domestically, continuity of operation after contract expiry as well as the obligation to use local goods and services.

The signed MoU will be a basis for further talks on details to draft CoW or CCoW amendments, which is targeted to be completed within six months.

Prior to Freeport and Newmont'€™s MoUs, the government signed a number of agreements with other mineral and coal-mining contract holders. However, the drafting of amendments is still in progress.

Indonesia Mining Association (IMA) deputy chairman Tony Wenas apparently expected contract amendments to be completed sooner.

'€œThe current administration is the one taking part in renegotiations, but the incoming administration will be the one to sign them. I don'€™t think this is appropriate. The current administration should be braver,'€ Tony said.