Newmont Mining Corp. said constructing a smelter in Indonesia, a measure being pushed by the country as it tries to eliminate the export of unrefined metal, doesn’t make economic sense.
“Because of the supply of smelting capacity in places like China, the economics of running a smelter just aren’t there,” Chief Executive Officer Gary Goldberg said yesterday.
Indonesia wants metals producers including Newmont and Freeport-McMoRan Copper & Gold Inc. to build processing capacity so that the country can capture more revenue from its natural resources. The government imposed duties last month on exports of copper concentrates, a semi-processed raw material. Both companies have halted shipments after being denied permits.
Newmont says it’s exempt from the new duties under its contract with the government. The Greenwood Village, Colorado-based company is hoping for a “mutually satisfactory” solution as it tries to resolve the dispute, Goldberg said in an interview in Hollywood, Florida, where he’s attending an industry conference organized by BMO Capital Markets.
Freeport and PT Aneka Persero Tambang Tbk, an Indonesian mining company, are studying the feasibility of building a smelter. Phoenix-based Freeport expects the study to be complete in April, Rozik B. Soetjipto, president of the company’s Indonesian unit, told reporters yesterday.
Freeport Chief Executive Officer Richard Adkerson said at the Florida conference yesterday that his company is having “productive” talks with the government over the export duties.
Newmont is aiming for a resolution of its own talks with Indonesia by the end of 2014, Goldberg said. It’s Batu Hijau copper and gold mine in the country will producing less concentrate for most of this year because mining is taking place in a lower-grade part of the deposit, he said.
While the company will consider acquisitions, there is “nothing out there on the radar screen today,” Goldberg said. Newmont will only consider deals that add to cash flow immediately, he said.
“We’re not really looking at assets that have long development periods,” Goldberg said.