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Newmont declares force majeure at Indonesia mine, sends workers home

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(Globalpost/GlobalPost)

US mining giant Newmont said Thursday it was placing thousands of workers at its Indonesian copper mine on leave and declared force majeure to avoid liability on existing orders, blaming new rules governing the sector.

It came two days after the miner, one of the biggest in resource-rich Indonesia, said that it was ceasing copper production at the Batu Hijau site as it has not exported for months due to the new regulations.

Southeast Asia's top economy introduced the rules 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.

It is one of a raft of economic policies pushed by nationalist politicians, who argue that Indonesia is losing out in potentially lucrative industries as foreign firms are reaping all the profits.

Copper concentrate, a partially processed product that is 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.

But Newmont has refused as it says the new levies conflict with its original agreements in Indonesia. Newmont and Freeport have been engaged in talks with the government to try to reach agreement.

The company said it would place 80 percent of its 4,000 employees at the mine on leave with reduced pay from Friday.

Martiono Hadianto, the head of Newmont's Indonesian unit, added the company was "left with no option but to declare force majeure".

Force majeure is a legal term releasing a company from obligation to fulfil existing contracts with its customers when faced with circumstances beyond its control.

Company spokesman Rubi Purnomo told AFP that force majeure was declared because "the company could not fulfil its obligation to produce and operate" at the mine on Sumbawa island, in central Indonesia.

The new rules are aimed at forcing foreign companies to build smelters and process raw minerals in Indonesia, but Newmont and Freeport argue this is not economically viable.

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http://www.globalpost.com/dispatch/news/afp/140605/newmont-declares-force-majeure-at-indonesia-mine-sends-workers-home