Indonesia Gives Newmont Mining Ultimatum: End Lawsuit Or Else
Just when thing were beginning to look up, the turbulence between Newmont Mining and Indonesia rages on. The country is now threatening to terminate Newmont’s mining contract if the company does not comply and withdraw its lawsuit.
Newmont earlier this month filed an international arbitration over Indonesia’s escalating export tax claiming it violates the company’s mining contracts. Newmont and fellow US miner Freeport-McMoRan Copper & Gold have halted copper exports since January 23.
"By stopping production, they are making our state revenues decline so we can say that they have defaulted," Sukhyar, director general of coal and minerals at the mining ministry said.
"Stopping production is just the same as negligence."
According to Newmont, the company was forced to stop copper production while it waited for an export permit from the government. It also states storage facilities reached full capacity in June.
"PTNNT's contract of work with the government of Indonesia explicitly grants the company the right to export copper concentrate," Newmont spokesman Omar Jabara said.
"As such, PTNNT remains in compliance with the contract of work and is prepared to resume production upon receiving an export permit from the government."
Newmont’s contract could possibly be revoked 90 days if Indonesia’s government declares it to be in default or negligent. Indonesia has also threatened to sue Newmont over breach of contract.
The tax on exports is part of Indonesia’s effort to force miners to build smelters and processing plants in the area. Freeport and Newmont have previously argued the two companies should be excused from the tax as they account for 97 percent of Indonesia’s copper output.
Freeport-McMoRan has had better luck with Indonesia. The company recently agreed on a Memorandum of Understanding (MoU) with Indonesia over its contract renegotiations.
Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”