The Indonesian government has announced that it will not engage in any negotiations or participate in the arbitration proceedings that Newmont Mining Corporation (NEM) has filed. The government stated that it will only resume negotiations with the American company over its mineral export ban when the arbitration filing is terminated.
The ban on exporting copper concentrate from Indonesia stems from the government’s desire to keep the refining process inside the country where it will benefit the Indonesian economy, instead of seeing the ore exported to more affordable refining facilities elsewhere. The export ban prompted NEM to halt operations at its mines completely as it argues the ban makes it impossible to refine the ore affordably.
The government has threatened to terminate the contract NEM holds giving it rights to mine and process the copper concentrate unless the company withdraws its arbitration request filed with the International Center for the Settlement of Investment Disputes. As part of its filing, NEM cited the lack of contractual provision for export taxes in its agreement with the Indonesian government, essentially saying the export tax is illegal.
Meanwhile, other mining companies have come to terms with Indonesia over the new terms, with Freeport-McMoRan Copper & Gold. Inc. and other large companies (most American-based) working out new agreements and agreeing to the export taxes. The lack of company on their side of the negotiating table will no doubt make it more difficult for NEM to keep up their tone of resistance to the export taxes