PT Newmont
Nusa Tenggara
Indonesia Export Issues Fact Sheet 2009 MINING LAW In January 2009, Indonesia’s new law on mineral and coal mining came into effect. Among other provisions, the law seeks to increase domestic processing and refning of mined ores. The 2009 mining law does not expressly require mineral producers to build smelters, but is designed to increase domestic processing and/or refning of raw ores to add value in Indonesia . The 2009 Mining Law also is clear in upholding the validity of Contracts of Work (CoW), including the one that governs operation of PT Newmont Nusa Tenggara’s (PTNNT) Batu Hijau copper and gold mine on the island of Sumbawa in Indonesia.
From the 2009 Mining Law: Transitional Provisions Article 169 Upon this Law coming into effect: a. Any contract work and coal contract work (Perjanjian Karya Pengusahaan Pertambangan Batubara) that existed prior to the promulgation of this Law will remain valid until the expiry of the contract.
REGULATIONS These new requirements, as currently understood, contradict the CoW and also contradict Government Regulation Number 1 of 2014 issued by the President of the Republic, which states:
In regulations issued in January of 2014: · The Ministry of Finance imposed an export duty on copper concentrate of 25% of revenue in 2014, rising to 60% in the second half of 2016.
Article 112 · The Ministry of Energy and Mineral Resources requires companies to demonstrate “seriousness” towards smelter construction to obtain a recommendation for an export permit; will allow exports in “specifc quantities,” yet to be determined; and prohibits export of copper concentrate after January 12, 2017.
Upon this Government Regulation coming into effect: 1. Contracts of work and coal contracts of work signed prior to the promulgation of Government Regulation 23 of 2010 on Implemention of Mineral and Coal Mining Business Activities will remain valid until their expiry.
PTNNT’S CONTRACT OF WORK PTNNT signed its CoW with the Government of Indonesia in 1986. The Contracts of Work were designed to provide assurance and stability to encourage signifcant, long-term investments in the development of Indonesia’s natural resources, and were recommended by Parliament and approved by the President of Indonesia. PTNNT’s CoW details PTNNT’s obligations and rights, including the obligation to produce and the right to export copper concentrate. Despite changes in various laws and regulations over the years, the obligations and rights specifed in the CoW have continued to govern operation of the mine. Article 2.1, the frst substantive paragraph the CoW, states: “The Company … shall have all rights conferred on it by this Agreement and in particular the sole rights… to market, sell or dispose of all the product inside and outside Indonesia…”
Article 11.1 further confrms this right: “The Company shall have the right to export its products obtained from the operations under this Agreement. Without in any way prejudicing the Company’s basic right to export its products such export will be subject to the provisions of the export laws and regulations of Indonesia.” Article 13 states: “The Company shall not be subject to any other taxes, duties, levies, contributions, charges or fees now or hereafter levied or imposed or approved by the Government other than those provided for in this Article and elsewhere in this Agreement.”
www.ptnnt.co.id
Newmont Nusa Tenggara
@NewmontID
Indonesia Export Issues Fact Sheet DOMESTIC PROCESSING AT BATU HIJAU The value added through Batu Hijau’s processing plant improves the quality of the copper ore mined by more than 50 times, capturing roughly 95 percent of the revenue stream in Indonesia. PTNNT also has supported in-country smelting for many years by shipping as much copper concentrate to PT Smelting (Gresik) – Indonesia’s only copper smelter – as it can take from Batu Hijau. While multiple studies have demonstrated that it is not economically viable for the Company to build its own smelter, PTNNT has negotiated and signed conditional concentrate supply agreements with two Indonesian companies that have publicly announced plans to build their own copper smelters in the country. PTNNT has also advocated for a joint Governmentindustry study consortium, led by an independent expert, to further analyze copper smelting economics. Photo: Processing facility at Batu Hijau. Since operations began in 2000, PTNNT has paid more than $3 billion in taxes and royalties to the government, in addition to investing an average of approximately $10 million annually toward local economic, infrastructure and social development. Approximately 9,000 people (more than 99.5% of whom are Indonesian), including employees and contractors, support their families by working at Batu Hijau. BREAKDOWN OF PTNNT’S PAYMENTS AFTER EXPENSES (2000 - JUNE 2013)
33%
67%
Dividends paid to all shareholders
Taxes, non-taxes and royalties paid to central and local governments
www.ptnnt.co.id
Newmont Nusa Tenggara
@NewmontID