This Major Copper Mine Is Shutting Down

Oil Price – by Dave Forest

We’ve heard a lot lately about mines closing. Mostly in down-trodden commodities such as gold, zinc and uranium.

But we got news this week of a shutdown for a higher-priced metal: copper.

That came from major miner Newmont, who said that it is officially shuttering its Batu Hijau copper-gold mine in Indonesia.  

The move comes because of an ongoing ban on the export of copper concentrates out of Indonesia. Imposed by the government in an attempt to force miners to upgrade their products in-country.

Newmont has been stockpiling copper concentrate at the mine site since the export ban came into effect in January. But the company said it has now run out of storage space–and thus has no choice but to cease operations.

Mining union officials at the site confirmed to Reuters on Tuesday that mining had stopped “since two days ago.”

This is a significant loss of copper supply–with Batu Hijau having last year produced 161 million pounds. And it’s an even more interesting comment on the current regulatory environment for mining.

Metals prices have been strong for a number of years. Prompting many governments globally to move on increasing taxation and regulation in the sector.

Unfortunately, such rule changes are now coming just as the metals business is facing headwinds. With prices for several commodities having fallen to multi-year lows.

Governments however, seem to be out of step with these realities. In the Philippines, for example, a national committee released a proposal last week for increasing mining taxes. Mandating that miners in the country could now face up to 55% tax on operating profits.

Tanzania also said this week it is also reviewing its mining contracts. To “generate more revenues for the state”, according to officials.

In-country producer Barrick Gold has reportedly already seen its royalties lifted by 0.3%. And the government has indicated that further changes could be coming.

Of course, not all tax increases are harmful. But it’s interesting to see such a wave of hikes at a time when the industry is facing its worst conditions in years.

We’ll see if the outcomes match the ambitions here.

Here’s to the right moves at the right time,

By Dave Forest

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