Govt decision on Newmont divestment to be made in July

The government will decide in July whether or not it will accept the offer to buy shares of PT Newmont Nusa Tenggara (NNT) which have to be sold as part of its mandatory divestment program, Kompas reported on Saturday.

Speaking in Jakarta on Friday, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the decision would be made after the government completed its assessment on the actual value of the company?s assets.

He said that the government had hired independent appraisers to calculate the actual value of NNT?s assets because the government viewed that the value of the total assets used by Newmont in calculating the share prices was still too high.

According to the mining regulation, foreign mining companies operating in the country should reduce their ownership to 49 percent within 10 years after its commercial production and sell the rest to the government or appointed national companies.

Newmont and its foreign partner need only to divest 31 percent of their shares because their local partner has already owned 20 percent. Of the 31 percent shares which have to be divested, 3 percent should have been sold in 2006, and 7 percent each from 2006 to 2010.

Newmont and its foreign partner offered a price of $109 million for the 3 percent shares to be divested in 2006, $282 million for the 7 percent shares to be divested in 2007, $426 million for the 7 percent shares for 2008, and $348 million for the 7 percent shares to be divested this year.

The price of the shares to be sold this year is based on Newmont?s asset valuation, which puts the total value of the total assets at $4.9 billion.

The government has said that it will cooperate with the provincial administration of West Nusa Tenggara to buy all the company?s 24 percent that have to be divested from 2006 to 2009.

The divestment of the 3 percent in 2006 and 7 percent in 2007 was delayed because the shares were still kept by banks as collateral of Newmont loans. The government had taken the company to the international arbitration due to the delay. The verdict, which was later issued by the arbitration court asked Newmont to complete the divestment within three months in favor of the government. (*)