Export Ban Dispute: Newmont Nusa Tenggara vs Indonesian Government
The dispute between the Indonesian government and mining giant Newmont Nusa Tenggara (NNT) over the recently implemented ban on the export of unprocessed copper, gold, nickel, bauxite and iron is heading for a climax. In Indonesian media, President Susilo Bambang Yudhoyono was quoted saying “NNT has undermined the sense of justice of the Indonesian people” and pronounced his disappointment of NNT’s reluctance to respect the sovereignty of the state. Previously, the government said it may revoke mining permits of NNT.
The problems began when the Indonesian government implemented the ban on mineral ore exports in January 2014 (this ban is part of the Minerba Act, or, 2009 Mining Law). This policy aims to boost domestic processing facilities and value-added revenues (exports of processed mining products are allowed). Although this ban had been announced several years earlier, few expected the government to implement it as it was not in line with existing contracts of work between miners and the government. Moreover, Indonesia lacks sufficient domestic processing facilities (smelters), implying that mining exports would plummet considerably. Due to the export ban, NNT has had to stop exports and production at its Batu Hijau mine in Sumbawa (West Nusa Tenggara). A month ago, the company said it is forced to declare a force majeure. Not long after, NNT announced to file for international arbitration at the Centre for Settlement of Investment Disputes (ICSID) in Washington DC, USA. In this case, NNT will request a stop to the export ban and abort higher export duties as these are not in line with the contract of work between NNT and the government, and are also not in line with the bilateral investment agreement between the Indonesian and Dutch governments (NNT is majority-owned by Dutch based Nusa Tenggara Partnership BV based in the Netherlands.
Meanwhile, the Indonesian government is ready to strike back as it prepares a counter litigation. President Yudhoyono has already instructed the formation of a team of legal experts to handle the case. Furthermore, if NNT will not restart production within 90 days after its default (as it ceased production) the government can revoke the mining permit of the copper miner. However, the government has stated several times that it will not act against the mining company in case NNT decides to drop the arbitration case.
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