US mining giant Newmont said today it has ceased production at its Indonesian gold and copper mine due to controversial new rules governing the sector in Southeast Asia's top economy.
Newmont has not shipped copper concentrate overseas since the rules were introduced in January. They include a ban on the export of some unprocessed minerals and higher taxes for some commodities that can still be shipped out of the country.
Copper concentrate, a major export for Newmont and its US peer Freeport McMoRan, was exempt from the ban but the companies still faced paying the new, higher taxes on shipments of the product.
But Newmont has refused - and stopped shipments - as it says the new levies conflict with its original agreements in Indonesia. It has been engaged in talks with the government to try and reach agreement.
The miner said that the stores at its Batu Hijau mine, in central Indonesia, were now full as it had not been exporting, and as a result it would have to stop production.
"(Newmont's) copper concentrate storage facilities at Batu Hijau are now full, forcing the operation to halt processing activities and cease production of copper concentrate," the company said in a statement.
Zaenuddin Wanden, the head of a union representing Newmont workers, confirmed to AFP that machines at the mine that process ore - the raw rocks dug out of the ground - into concentrate had been shut down.
However Newmont added that it had decided not to go ahead with an earlier plan to send employees home on paid leave, as the company is waiting to see what will happen in talks with the government this week.
The new rules governing the mining sector are aimed at forcing foreign companies to smelt raw minerals in resource-rich Indonesia and keep more profits from the sector in the country.
But the industry has criticised their introduction as badly planned and analysts say the move has added to increased business uncertainty.
