Newmont cannot fire workers: Minister

JAKARTA. PT Newmont Nusa Tenggara (NNT), Indonesia’s second-largest copper and gold producer, cannot execute its plan to lay off workers in a bid to cut costs without formal consent from the government, says Energy and Mineral Resources Minister Jero Wacik.

Jero said on Tuesday in Jakarta that the company, a subsidiary of US-based Newmont Corporation, had not informed him of the cost-cutting plan, which the company argued stemmed from low production and the stagnation of mineral prices.

“Whatever the reason is, they cannot simply trim the number of workers without consulting us [the government] first,” he told The Jakarta Post on the sidelines of an event marking the 67th anniversary of the Indonesian mining and energy sector.

Newmont, according to Jero, “must go through a lengthy discussion with the government before executing the plan”.

According to an internal company memo signed by NNT president director Martiono Hadianto on Sept. 27, a copy of which was obtained by the Post, the company has informed its employees of the plan to let go of around 20 percent of expatriate workers and 2.8 percent of local staff this month. NNT currently employs 4000 permanent workers and 3000 contract workers.

When asked about the distribution of the internal memo, Martiono said that while the company had indeed been planning to trim its workforce, the plan “was not yet fixed”.

“We are still mulling the plan. A plan is, after all, a plan,” he said in Jakarta while confirming the percentages of the workers the company planned to reduce as outlined in the memo.

Separately, the Energy and Mineral Resources Ministry’s minerals and coal director general, Thamrin Sihite, told reporters in Jakarta that he had questioned the firm’s plan to lay off its workers, claiming that it was “unsuitable”.

“I do not think it is the right decision for them [Newmont] to abruptly reduce the number of their employees merely because commodity prices are currently low. The firm should look to what could happen to prices in the next two or three years,” he said.

In addition, he said, should NNT go ahead with the plan then it must ensure that it fulfills all of its obligations to their workers.

NNT is among the giant mine firms who are currently in the process of renegotiating contracts of work (COW) with the government.

Two of the major points that NNT have yet to agree on are the obligation to build its own smelting
plant to process its gold and copper concentrates as required by the government as well as its divestment, discussion of which is still ongoing.

The deputy director of the ReforMiner Institute, an Indonesian energy sector think tank, Komaidi Notonegoro, told the Post that given the fact that Newmont had been in the media spotlight lately, the firm needed to be careful.“While it is reasonable for any company to execute its corporate plans, in this case, they must negotiate with the government,” he said on Tuesday.

NNT has revised its target for the 2012 production of the Batu Hijau mine site from 114,000 ounces of gold to 71,000 ounces, and 170.6 million pounds of copper from the previous 192 million, Reuters reports. (Amahl S. Azwar/ The Jakarta Post)