T

he Energy and Mineral Resources Ministry is urging copper miner PT Newmont Nusa Tenggara to complete negotiations over the amendment of the firm'€™s contract of work (CoW) as a previous deal that filled the void has just expired.

Energy and Mineral Resources Minister Sudirman Said stated on Tuesday that the government did not need to extend a memorandum of understanding (MoU) with Newmont, which expired on Tuesday, as it did with another copper giant, PT Freeport Indonesia, which had its MoU extended by six months.

'€œAs I understand it, an extension is not compulsory for an MoU. We won'€™t talk about the MoU; we will talk about matters that are legally needed,'€ Sudirman said, referring to the CoW amendment.

The government has been struggling to renegotiate a number of existing mining and coal contracts to comply with the 2009 Mining Law. To fill a void in the legality of miners'€™ operations, the government has signed MoUs with several miners.

The MoU with Newmont highlighted several points to be adjusted and drafted in the amendment of its contract, which should have been completed six months after the signing of an agreement on Sept. 3 last year between Newmont Nusa Tenggara, a subsidiary of US-based Newmont Mining Corp., and the Ministry'€™s mineral and coal directorate general.

The signing was done after Newmont withdrew its international arbitration appeal against the Indonesian government'€™s policy of banning ore exports. The MoU also secured Newmont the permit to resume export of its semi-finished copper concentrate products.

Under Newmont'€™s MoU, the company has principally agreed to pay higher royalties of 4 percent for copper and 3.75 percent for gold, up from the current rates of 3.5 percent and 1 percent, respectively.

The company'€™s mine size must also be reduced to 66,000 hectares from the around 86,000 hectares it is at present, according to the MoU, which also highlighted Newmont'€™s support for the domestic mineral downstreaming policy by establishing a copper smelter.

Mineral and coal director general R. Sukhyar said that although Newmont'€™s MoU was not extended, his office would continue to work on Newmont'€™s CoW amendment to make it conform to the 2009 Mining Law and ensure that previous terms agreed to would continue to be valid.

'€œWe will accelerate the amendment process and are expecting to finish it in April. We have sent a draft of the amendment, but we haven'€™t received any reply from Newmont,'€ Sukhyar said.

Newmont is now considering sending its copper concentrate to a planned copper smelter that will be built by Freeport.

A deal between the two companies would determine whether the government would issue a permit for Newmont to extend exports of copper concentrates. The permit, issued last year and only valid for six months, is scheduled to expire on March 18.

The possibility of such deal emerged after the government found out that copper concentrate supplies would not be enough to feed to many smelters in the country.

There is currently only one copper smelter in the country, which is operated by PT Smelting Gresik and has a capacity to process up to 1 million tons of copper concentrate per year. Under a plan by Freeport, a new smelter with a capacity of 2 million tons will be built in Gresik. Another smelter is also planned by the Papua administration with a capacity of 900,000 tons.