Newmont Mining's hardball tactics could raise tensions in Indonesia

|About: Newmont Mining Corporation ... (NEM)|By:, SA News Editor

Newmont Mining's (NEM) force majeure declaration at its Batu Hijau copper mine in Indonesia was a surprising move but illustrates how its tactics in dealing with the government in the dispute over export taxes have differed from Freeport McMoRan (FCX).

FCX is much more heavily invested in the country, with more to lose by picking a fight with the government, according to Bernstein's Ignace Proot; FCX employs 30K-plus people in Indonesia, more than 7x as many as NEM, and is planning an ambitious new underground copper mine.

"It makes sense for Newmont to do this now, because they have inventory built up for the holiday season, and there'll be a new president in the fall," who might renegotiate the export taxes, Proot says.

NEM has been vocal in discussing the possibility of taking Indonesia to arbitration, while FCX has proceeded cautiously and its CEO met with government officials this week; FCX has indicated it was close to reaching an agreement, which could involve getting a break on taxes in exchange for helping to build a new smelter.