New $1.9b copper mine in NTT ready to roll

JAKARTA (JP): A new $1.9 billion copper mining project in East Nusa Tenggara will begin production later this month, the operator, PT Newmont Nusa Tenggara, announced on Monday.

The subsidiary of gold producer Newmont Mining Corporation of United States, said the project in Batu Hijau on Sumbawa island would have a capacity to process 160,000 tons of ore a day, promising an annual production of 246,000 tons of copper concentrate.

"This is the Newmont's first mine which produces copper as a main product which will contribute 80 percent of the revenue," Newmont Indonesia Ltd. president Richard B. Ness said during a presentation at the Investment Coordinating Board.

Optimum capacity should be achieved in two years, Ness said.

The copper concentrate would be sold to 13 smelters in Japan, South Korea and other Asian countries.

The company estimated in 1990 that Batu Hijau had 4.8 million tons of copper deposits and 390 tons of gold deposits. The area could be mined for 20 years, Ness said.

PT Newmont Nusa Tenggara is owned by Newmont Indonesia Ltd. (45 percent), Japan's Nusa Tenggara Mining Corp. (35 percent) and PT Pukuafu Indah (20 percent).

The shareholders financed about US$850 million of the total investment, raising $1 billion from German, American and Japan financial institutions.

Ness said the mine would require another $150 million for working capital, environmental protection and housing facilities in the next two years.

During the construction phase, Newmont Nusa Tenggara employed 14,000 workers. Ness said once production commenced it would employ approximately 4,000 workers.

Newmont has also developed infrastructure on the island to support the operation. The infrastructure includes a $310 million coal-operated power plant producing 120 megawatts and its distribution system, a $130 million port and a $365 million housing complex.

The company spent some $400 million on local products and services, Ness said.

Jim A. Osterkamp, executive director for business administration, said gold and copper remain promising, although their prices in the world markets had been declining.

Prices should recover in two years, Osterkamp said, noting that the copper price had rebounded to 70 US cents per pound, from 68 cents.

Batu Hijau is the second mine operated by Newmont in Indonesia. The first, a $132 million gold mine in Minahasa, North Sulawesi, began operating in 1996. It is operated by PT Newmont Minahasa Raya, which is 80 percent owned by PT Newmont Indonesia Ltd. and 20 percent by PT Tanjung Serapung.

Gold sales reached $49.2 million in the first six months of 1999 and are forecast to reach $50 million in the second, he said.

The Minahasa mine produced 261,000 ounces of gold in 1998 and its output is targeted to rise to 300,000 ounces this year.

Ness said Newmont had taken every precaution in its operations not to harm the environment.

He said in the Minahasa project the company treated the waste -- removing mercury and cyanide -- before disposal of the waste materials.

He said mining was a long-term investment, and the company would not jeopardize its operations -- including Newmont Nusa Tenggara -- with environmental problems.

Newmont is currently conducting surface exploration in Mongondow, North Sulawesi. "We haven't found enough deposits to produce," Ness said, adding that the company had so far spent over $5 million on the project. (02)