London 22/09/2015 - Newmont's export permit with the Indonesian Ministry of Trade has expired although the company is working to secure a renewal, the company told FastMarkets.
"As was the case with the issuance of previous export permits, we anticipate that administrative issues could result in a delay in processing the final permit," company representative Omar Jabara said.
The company's previous export permit, extended in March this year to September 18, was contingent on commitments to build a copper smelter in Indonesia, part of the country's move to secure a greater proportion of the metals value chain for its domestic economy.
But although Newmont posted a $25 million assurance bond to help push through a renewal of its export permit this time last year, the company is yet to move forward with those plans.
Some market sources have questioned the feasibility of doing so from Newmont's perspective given the cost of doing so amid a market slump - prices fell to six-year lows last month.
Under a law introduced in 2009, all miners operating in Indonesia must commit to build domestic smelting facilities to process their raw minerals in return for permits that also compel them to pay higher royalties. The government also introduced in January last year a ban on exports of mineral ores although Newmont and Freeport were granted exemptions because there are very few smelting facilities in the country.
But, according to reports, Newmont's lack of progress on a new smelter since March has prompted Jakarta to reject its application for a new permit, although the two parties remain in talks.
Newmont operates the Batu Hijau copper and gold mine on Indonesia's Sumbawa Island, which produces roughly 212,000 tonnes of copper per year and 576,000 ounces of gold, according to the company's second-quarter production report. The company will continue to mine concentrate there for now - it does not plan to halt operations, Jabara said.
"We are prepared to maintain normal operations at Batu Hijau to allow for the permit renewal process to run its course," he added.
Batu Haiju is a supplier of copper concentrates to smelters around East Asia and also to the Gresik smelter in Indonesia but a temporary lack of supply from the mine would be unlikely to have a major impact on the market at present.
Spot treatment and refining charges (TC/RCs), discounts on the copper price paid to offset the cost of turning concentrate into metal, have shot up in the past month to an overall global number of $87.5-97.5 per tonne/8.75-9.75 cents per pound while well-stocked smelters have stayed away from the market ahead of annual negotiations.
(Editing by Mark Shaw)