Newmont Mining expects normal mining operations to continue at its copper-gold mine in Indonesia for at least the next two months, while it tries to resolve an impasse with the government over copper concentrate exports, Chief Executive Gary Goldberg said on Tuesday.
In an interview, Goldberg also said Newmont, the biggest US-listed gold producer, had no plans to issue equity to pay down debt, had “nothing pending” on the acquisition front and still had non-core assets to sell.
Indonesia’s move last month to levy an annually escalating tax on copper concentrate exports before it bans them in 2017 has weighed down Newmont stock. The miner’s Batu Hijua mine in Indonesia is expected to be a strong cash generator in 2015 and 2016.
“We are set up for the next couple of months. Depending on how much we can ship to the Gresik smelter in Indonesia, we could even go a little bit longer than that,” Goldberg said, referring to a local smelter that processes some of Newmont’s concentrate.
Newmont shipped concentrate in the early part of January and had basically cleared out its stocks, he said.
Rival copper miner Freeport McMoRan Copper & Gold said last month that delays in getting government approval for 2014 exports caused it to defer production of some 40 million pounds of copper and 80,000 ounces of gold per month until the issue was resolved.
Even though Newmont had legal and arbitration options, Goldberg said “good open dialogue” was the best way to resolve the impasse.
Both Freeport and Newmont have said the new export regulations conflict with contracts they signed with Indonesia that exempted them from new taxes or duties.
Indonesia’s new policies are meant to force miners to process more material in the country to help narrow a current account deficit that has battered Indonesia’s currency.
Nevada output falls temporarily
Newmont shares have slumped nearly 20 percent in the past three months, partly because of a weaker gold price and the uncertainty in Indonesia. But they also have recently been weighed down by the company’s lower-than-expected 2014 gold production forecast released last Thursday, and concerns the company might issue stock for an acquisition.
The miner, which is the world’s third largest gold producer by market value, expects to produce between 4.6 million and 4.9 million ounces of gold this year, down from the 5.1 million it produced in 2013.
Goldberg said the drop in production at its Nevada mines this year was caused by lower grades and was temporary. The mines have been the mainstay of Newmont’s operations.
Output “will pick up over the next 18 to 24 months, both as we mine into some different areas and we see the benefit of the Turf ventilation shaft,” he said, referring to a project to provide underground ventilation so higher-grade areas can be accessed more quickly.
Asked about acquisitions, Goldberg said there was “nothing pending out there.” However, he added that there were still opportunities for the Denver-based gold miner to sell non-core assets.