Govt offers local administration to buy Newmont shares

Coordinating Minister for the Economy Hatta Rajasa said that the government would offer a local administration to buy a seven percent stake in PT Newmont Nusa Tenggara after it failed to obtain approval from the House of Representatives to acquire the shares, Kontan daily reported on Friday.

Hatta said that the government had finally decided not to buy the shares of the US-based Newmont?s subsidiary. ?The government will transfer the right to buy the shares to the local administration,? he said, adding that if the local administration turned down the offer, the government would ask private companies to buy the Newmont shares,? he added.

The Finance Ministry?s State Investment Agency (PIP) and Nusa Tenggara Partnership BV, the owner of PT Newmont Nusa Tenggara, signed a sale purchase agreement (SPA) for a 7 percent stake in PT Newmont Nusa Tenggara in May, 2011.

However, the deal could not be carried out because the US$246.8 million acquisition required approval from the House, since the government had to use state budget to finance the transaction.

Since 2006, as part of its mandatory divestment program, Nusa Tenggara Partnership BV has gradually reduced its equity in Newmont, which controls the rights over the Batu Hijau mining area, Asia?s second-largest copper and gold mine.

At present, the local government comprising the West Sumbawa and Sumbawa regency administrations and the West Nusa Tenggara provincial administration have purchased 24 percent of Newmont through Multicapital, a joint venture with Bakrie Group. Nusa Tenggara Partnership BV has to divest another 7 percent in order to fulfill its divestment obligation. (*)