PT Newmont says Batu Hijau gives twice expected cash flow
PT Newmont says Batu Hijau gives twice expected cash flow
MELBOURNE (Dow Jones): PT Newmont Nusa Tenggara's Batu Hijau copper and gold plant in Sumbawa, Indonesia, produced around 265.8 million pounds of copper and 165,000 troy ounces of gold in its first year of production, Tom Enos, the company's president- director, told reporters Thursday.
Cost of production after taking into account gold credits was 59 U.S. cents a pound of copper, Enos said.
The mine started production in September 1999 during a period of political instability in Indonesia.
"Batu Hijau has ramped up to design rate. It's generating twice the cash flow we expected and this is without a swing in copper price," Enos told delegates at the Mining 2000 conference in Melbourne.
Batu Hijau generated around US$46 million in cash in its first year of production, Enos said.
NTT is 45 percent-owned by U.S.-based Newmont Mining Corp. (NEM), the world's third largest copper producer.
The US$1.8 billion Batu Hijau, marks Newmont's return to the copper business for the first time in ten years.
Newmont is partnered in the project by a Japanese consortium led by Sumitomo Corp. of Japan and an Indonesian company, PT Pukuafu Indah.
While the socio-political issues and soon-to-be- implemented Regional Autonomy regulations will be "major external challenges" to mining companies in Indonesia, the situation in Indonesia will improve, Newmont's Enos said.
"I have a lot of faith in the (Indonesian) government and the people of Indonesia. Things will turn around, Indonesia will get on track and the economy will grow," Enos told delegates.
"We are in for the long haul," Enos said.
The Regional Autonomy program involves the decentralization of decision-making to the provincial governments in Indonesia.
For mining companies, this means paying royalties directly to provincial governments and dealing directly with them.
But such a program may cause legal tangles because mining companies such as Newmont are bound by the Contract of Works, or COWs, which they signed with the central governments.