By Joseph Kirschke

Newmont Mining Corp. has invoked force majeure on copper sales from its Batu Hijau copper mine in Indonesia in wake of the geologically rich nation’s hotly contested mineral ore export ban. On ceasing output and concentrate processing, Newmont, also the No. 2 gold producer, has suspended 80% of its 4,000 workers at reduced pay.

Indonesia first banned raw ore shipments January 12 amid a concentrates tax to spur foreign companies to build local smelters. But “despite best efforts, we have not been able to export copper concentrate since January – and we still do not have an export permit,” said Martiono Hadianto, CEO of Newmont’s Indonesian operations, according to Reuters. “We are left with no option.”

The Colorado-based miner’s move came as Indonesia sought to force a breakthrough in the deadlock, which has slowed growth in southeast Asia’s biggest economy. A Force majeure under its Contract of Work (CoW) means Newmont can miss deliveries for circumstances beyond its control, indicating the company doesn’t forsee a resolution anytime soon; 2014 copper concentrate guidance stood at between 110,000 and 125,000 tons at the Sumbawa island complex.

Newmont and Phoenix-based Freeport McMoRan Copper & Gold Inc. — together representing 97% of Indonesian copper output — have sought exemption from the tax, which begins at 25% and rises to 60% by Q3 2016, before a total ban the year following. Freeport, meanwhile, has announced 60% production cuts at its West Papua mine ahead of a possible force majeure.

The Newmont operation will remain under care and maintenance as shipping from storage to Indonesia’s only copper smelter, PT Smelting at Gresik, continues through Q4 2014, according to company representatives; this allows for concentrate shipments of 81,000 tons between now and Q4, they added.

Mining Ministry Mineral Enterprise Director Dede Suhendra said negotiations with Newmont will be ongoing; top presidential candidate Joko Widodo, for his part, pledged to maintain the ban ahead of Q3 elections. The stakes have been high since the law’s first announcement in Q1 2009 as the archipelago nation hosts some of the world’s greatest copper, gold, tin and thermal coal reserves, yet lacks the infrastructure to accommodate efficient construction of projects like smelters.