Newmont mulls legal action on Indonesia tax

INDONESIA (REUTERS) - Newmont Mining Corp said on Wednesday that it was considering legal action as well as other options in Indonesia, where it is facing a new export tax.

Indonesia softened a proposed mineral ore export ban earlier this month, but surprised miners by imposing a new tax on exports of concentrate. Newmont exports concentrate from its Batu Hijau copper and gold mine.

The US miner's contract of work with Indonesia's government specifies the company must pay a 35 per cent corporate income tax.

The contract says Newmont is not subject to any other taxes, duties or fees, company spokesman Omar Jabara said in an emailed statement last week.

Newmont said on Wednesday that it was looking at how the tax would affect its operations and would continue to "engage" with Indonesia's government.

Freeport McMoRan Copper & Gold Inc, which has a similar agreement with the government of Indonesia, said earlier on Wednesday that the new tax violated the deal.

But Freeport Chief Executive Officer Richard Adkerson said he was confident the company would reach an agreement with the government. Freeport has a "strong desire" to avoid international arbitration, he added.

Indonesia's export ban aims to boost the Southeast Asian country's long-term return from its mineral wealth by forcing miners to process their ores domestically.

Miners such as Newmont and Freeport were given a reprieve from the ban until 2016, but were slapped with an annually escalating tax on their concentrate exports.

Shares of Newmont were down 2.3 per cent at US$24.25 (S$31) on the New York Stock Exchange, while Freeport fell 1.5 per cent to US$34.74.