Govt asks for lower price for Newmont shares

Finance Minister Agus Martowardojo is hoping that Newmont Nusa Tenggara (NNT) will lower the price of the seven percent shares it will sell to the government as part of its mandatory divestment program.

The finance minister said in Jakarta on Wednesday that he hoped that the coal mining company which operates copper and gold mine in Sumbawa, West Nusa Tenggara would cut down the price for the seven percent stake to US$250 million or lower from $271.6 million as already agreed upon by Newmont and the energy and mineral resources ministry.

Based on the offering price, state investment agency Pusat Investasi Pemerintah (PIP) which has been appointed to buy the shares would need about $258 million to buy the shares because it would receive $13 million in dividend payment for 2010, the finance minister said.

?It means that with the deduction of the dividend payment, PIP will need only to pay $258 million for the Newmont shares,? he said.

NNT operates the Batu Hijau gold and copper mine in West Nusa Tenggara. Under a mining contract signed in 1986, the company?s foreign shareholders, Newmont Indonesia Limited (NIL) and Nusa Tenggara Corporation (NTMC), an affiliate of Japan?s Sumitomo Corporation, must divest 51 percent of their shares to local investors after 10 years of operation.

As local companies already held a 20 percent stake (PT Pukuafu Indah with 17.8 percent and PT Indonesia Masbaga Investama with 2.2 percent) foreign shareholders in the company are required to divest 31 percent.

NNT?s foreign shareholders have so far sold 24 percent of the shares to a joint venture between PT Multicapital, a business unit of coal giant PT Bumi Resources, and the local administration, called PT Multi Daerah Bersaing (MDB).

The local administration had earlier proposed to the energy and mineral resources ministry to allow the joint venture of MDB and Multicapital to buy the remaining seven percent share. But the finance minister insisted the government, through PIP, would buy the shares.

The finance minister?s decision to buy the shares has angered local residents. They have threatened to close down the mine if their demand to buy the shares is not met. (*)