Indonesia Demands Newmont Withdraw Arbitration Filing

By Dow Jones Business News, 

By I Made Sentana and Deden Sudrajat

JAKARTA, Indonesia-Indonesia Thursday demanded Newmont Mining Corp ( NEM ) withdraw the international arbitration the Denver-based miner filed earlier this month over a mineral export ban for negotiations to resume, a government official said.

"The government's stance is that Newmont must withdraw the arbitration request," said Sukhiyar, director general of coal and minerals at the Energy and Mineral Resources Ministry, after a meeting with Martiono Hadianto, chief executive of Newmont's Indonesian unit.

Mr. Sukhiyar, who goes by one name, added that Newmont's Indonesian unit has relayed the government's demand to its headquarters.

"They said they still want to continue operations in Indonesia," he told reporters.

Mr. Hadianto separately refused to answer if Newmont will meet the government's demand. But he said the company is committed to reaching an agreement with the government for the resumption of copper concentrate exports.

"The most important thing is that we can resume exports after being halted for six months," he said.

Several government officials have said recently that they would take "stern action" against Newmont, including the possibility of terminating Newmont's mining contract, if it refuses to withdraw the arbitration proceedings.

Newmont earlier this month filed for international arbitration at the International Center for the Settlement of Investment Disputes, seeking interim, injunctive relief to resume exports of copper concentrate.

The filing came after the company halted operations at its Batu Hijau mine in Sumbawa and declared force majeure last month, arguing it could not meet its obligation to buyers after the resource-rich nation banned ore exports in January and introduced taxes on exports of mineral concentrates.

The government policies are aimed at keeping mineral-refining processes within Southeast Asia's largest economy to benefit from higher export proceeds from resources. It is one of several policies Jakarta introduced in recent years that some argue smacks economic nationalism as the resource-rich nation tries to gain control of its vast resources.

Newmont complained that the new taxes violated its contract with the government, which don't include a provision for export taxes.

While negotiation with Newmont remains tough, the government said last week it has agreed on new mining terms with Phoenix-based Freeport-McMoRan Copper & Gold. Inc. which would pave the way for the company to resume exports. The deal, however, is still waiting for approval from President Susilo Bambang Yudhoyono.

Write to I Made Sentana at

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This article appears in: Commodities

Referenced Stocks: FCX , NEM

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