Government waits for Newmont?s 2009 divestment offer

The government still awaits the official offer from PT Newmont Nusa Tenggara (NNT) to buy the gold mining company?s shares that have to be divested as part of its mandatory divestment program, which is scheduled in March this year, Minister of Energy and Mineral Resources Purnomo Yusgiantoro has said.

Speaking in Jakarta on Friday, Purnomo, however, said that the whether or not the government would take NNT?s offer; it would depend mainly on its financial condition.

?The offer will be submitted to the finance minister who has the responsibility in deciding its financial aspect,? he was quoted as saying by Kompas daily. According to the minister, NNT had to continue its mandatory divestment program according to schedules even if NNT and the government had yet settled the dispute over the shares that had to be divested by the company in 2006 and 2007.

In March last year, the government and NNT went to the international arbitrary to settle their dispute over the 10 percent shares that had to be sold by NNT to national companies in 2006 and 2007. The result is expected to be announced next month.

According to the mining regulation, a foreign mining company is required to divest up to 51 percent of its stake to local investors. As 20 percent of NNT shares have already owned by a local company, the company is only required to divest 31 percent of its shares to the local investors. Three percent of the shares should be divested in 2006, 7 percent in 2007 and another 7 percent in 2008, 2009 and 2010, respectively.

The shares to be divested can be sold to local government if the central government rejects the offer. If, then, the local governments also refuse the offer, the stake can to be sold national companies.

The 2008 offer of the seven percent stake is made last year despite the fact that the sales of the 10 percent stake to the local governments have not been concluded.

The central government has accused NNT of delaying the sales of the 10 percent stake. NNT denied the charge saying that the divestment of the 10 percent shares could not be concluded because the local governments, which have been named to buy the shares, have difficulties to finance the share purchase.

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). (*)