Newmont Mining’s exit after more than 30 years illustrates the companies’ growing difficulties there
JAKARTA—When Newmont Mining Corp. began exploring for gold in Indonesia in the 1980s, the country’s wealth of untapped resources was seen as the Colorado-based miner’s ticket to the big leagues.
The Batu Hijau copper and gold mine in eastern Indonesia was one of the largest undeveloped deposits in the world, and Newmont’s billion-dollar investment put it on the path to becoming the world’s No. 2 gold miner by output.
More than three decades later, Newmont’s exit from Indonesia illustrates that the country has become a more difficult place for foreign miners to operate, say analysts. Newmont in June agreed to sell its 48.5% economic interest in the local unit that runs the mine, PT Newmont Nusa Tenggara, to a group of local investors led by Indonesian-listed oil-and-gas company PT Medco Energi Internasional Tbk. Japan’s Sumitomo Corp., with which Newmont operates the mine, is selling its stake to the group as well.
This came a few weeks after BHP Billiton’s sale of its coal interests in Indonesia to a unit of local energy group PT Adaro Energy Tbk. Heavier regulation was a factor in the decision to leave, Newmont Chief Executive Gary Goldberg told The Wall Street Journal earlier this month.
In recent years Indonesia has required foreign miners to gradually reduce their stakes to less than half, raised the taxes and royalties they pay and mandated they process ore locally—requiring a major investment in smelters at a time when commodity-price uncertainty has miners around the world tightening their belts.
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