T

he operations of copper mining firm PT Newmont Nusa Tenggara at its site in Batu Hijau in West Nusa Tenggara is currently uncertain as authorities have declined to issue a recommendation for the extension of its export permit. The rejection has come about because of an unclear commitment from the company to mineral processing.

Newmont Nusa Tenggara, a subsidiary of US-based Newmont Mining Corp., holds a license to export its concentrate based on a recommendation from the Energy and Mineral Resources Ministry'€™s mineral and coal office issued on March 18. The recommendation was valid for a six month period, and that period ended Friday.

Last month, the company submitted a request for a recommendation for a new six month export permit from the Trade Ministry in accordance with the government'€™s regulation. However, the Energy and Mineral Resources Ministry'€™s mineral and coal directorate general turned down the request.

'€œIf the company cannot meet the government'€™s requirements regarding a commitment for smelter development, we will never grant it [the recommendation],'€ mineral and coal director general Bambang Gatot Ariyono said on Friday.

The company produces between 300,000 and 400,000 tons of copper per year. It sends around 30 percent of the output to a smelter in Gresik, East Java, and sells the remaining volume of copper concentrate overseas. Copper concentrate exports are now under strict regulation by the government.

Starting from January 2014, the government implemented a ban on raw material exports as a consequence of the 2009 Mining Law requiring mining firms to increase the value of their products before sending them abroad.

Also as part of the law, the government allows a limited export of semi-finished mineral, such as copper concentrate, until 2017 in return for a commitment from mining firms to establish refining facilities either by themselves or in partnerships with other firms. Failure to show commitment or progress of facility development would force the government to put an end to the firms'€™ export licenses.

Because most mineral products are sold overseas, any cessation of export permits would affect company operations. Last year, Newmont Nusa Tenggara had to halt its operations for a few months following a similar disagreement with the government'€™s export policy. The company also submitted an appeal to an international arbitration board against the policy but then retracted the legal maneuver.

Newmont Nusa Tenggara had previously established several Memorandums of Understanding (MoUs) with several firms, including the local subsidiary of US-based Freeport McMoRan Inc., for a smelter development project. However, the fate of the MoUs remained unclear until now.

'€œThe MoUs have expiry dates. When the company [Newmont] requested a permit extension to export concentrate, we asked them about the MoU so that we could understand whether the planned partnership would be continued. Then, no more updates were received,'€ mineral director Mohammad Hidayat said.

Newmont Nusa Tenggara spokesman Ruby Purnomo said his company remained committed to meeting all requirements to receive a new export permit.

'€œFor now, we are trying to fulfill all requirements as part of the process to obtain a recommendation from the Energy and Mineral Resources Ministry and the Trade Ministry,'€ Ruby said.

He didn'€™t respond to questions regarding the continuity of his company'€™s MoU.

Freeport Indonesia, which operates the Grasberg mine in Papua, secured last July an extension of export permits from the government after the company frantically assured the government that it had made progress in its smelter development.