Cabinet meeting to decide on Newmont mining contract: Minister

The government will decide on the mining contract of copper and gold miner PT Newmont Nusa tenggara (NNT), a Indonesian unit of US mining giant Newmont Mining Corp.?s in a Cabinet meeting.

"The minister will terminate the contract. But I will only do it after getting approval from the Cabinet meeting. We shall not automatically terminate its contract on Feb. 22," the energy minister Purnomo Yusgiantoro told on Wednesday to parliament.

He did not spell out the timeframe for the meeting, but said based on the contract Newmont has a maximum of six months to meet its commitment after the government sends a default notice.

Purnomo said the government was waiting for the fact-finding team established by the government on Feb. 12, 2008 to finish their investigation into the case.

Earlier, the government has declared a "default" status for NNT because the company is still unable to divest 10 percent of its shares to the government or parties appointed by the government.

NNT has been given until Feb. 22, 2008, to complete the divestment process.

NNT insisted it had already complied with all regulations and therefore refused to accept the default status. Newmont Mining Corp. vice president and CFO Russell Ball, after a meetign with Director General of Mineral, Coal and Gothermal Resources Simon F. Sembiring on Feb. 14, 2008, said the government had given the company little room to maneuver.

If no agreement can be reached the two remaining options will be either to seek an out-of-court settlement or to send the case to an arbitration tribunal as is required in the contract of work, Ball said, adding that the company has yet to decide which way it would take.

NNT, which obtained its contract of works to operate a copper and gold mine in Batu Hijau, West Nusa Tenggara in 1986, is required to divest up to 51 percent of its shares to the government or Indonesian companies by 2010. By the end of 2007, the company should divest 10 percent of its shares as part of the mandatory divestment program.

Currently, NNT?s shareholders are Newmont Mining Corp (45 percent), local company PT Pukuafu Indah (PI) which controls 20 percent and a consortium led by?s Sumitomo (35 percent). (godang)