REPUBLIKA.CO.ID, JAKARTA - Newmont Mining Corp said it will be forced to cut production at its Batu Hijau copper and gold mine in Indonesia from around June 1, if talks with the government remain unresolved over export permits and taxes.

Indonesia in January levied an escalating tax on copper concentrate exports, but both Newmont and fellow miner Freeport-McMoRan Copper & Gold Inc - who account for 97 percent of Indonesia's copper output - say the rule conflicts with contracts they signed with Indonesia that exempt them from new taxes and duties.

"Batu Hijau's copper concentrate storage facilities will reach capacity in late May, requiring an orderly ramp down of operations," Newmont said in a statement.

"Once the mine's copper concentrate storage is filled, PTNNT (PT Newmont Nusa Tenggara) will move to cease mining and milling."

Newmont CEO Gary Goldberg said late last month the miner was running out of space to store copper concentrate in Indonesia but was cautiously optimistic it would get permission to export in the coming weeks and that the country's proposed export tax "will be clarified".

Before the new export rules, Newmont forecast copper concentrate output for 2014 at 110,000-125,000 tonnes. Newmont, which is the world's third largest gold producer by market value, usually supplies around 30 percent of its Indonesian output to the country's only copper smelter, PT Smelting at Gresik.

While talks with the government continue, Newmont said it will continue to ship and sell copper concentrate to PT Smelting throughout 2014.

However, it is currently unable to export the rest of the concentrate, which the government says is liable to a 25 percent export tax, rising to 60 percent in the second half of 2016, before a total concentrate export ban takes effect in 2017.

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