Govt threatens to issue default notice to Newmont
Friday, June 20 2008 - 03:12 AM WIB
The ministry?s director general of mineral, coal and geothermal Simon F. Sembiring said in Jakarta on Thursday that the default notice would be issued, should the company failed to settle the status of the shares within 30 days as of June 1.
He said that he had sent a letter to NNT management two weeks ago urging the company to clear the status of the shares before being offered as part of the mandatory divestment.
But Newmont said it has a pledge agreement whereby lenders who funded development of NNT have a legal right to repossess shares in the unit in lieu of payment should Newmont fail to repay the loans.
On April 1, NNT said it had sent a letter to the ministry to offer the seven percent stake in 2008 as part of their mandatory divestment program to the government.
But in the next few days government through the ministry?s Directorate General of Mineral, Coal and Geothermal that the government would respond the NNT?s offer only after the firm clarified the status of the shares.
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.
Under the contract, three percent of the stake should be divested in 2006, seven percent in 2007 and another seven percent respectively in 2008, 2009 and 2010. The tag price for three percent stake is US$106 million and $282 million for the seven percent.
The latest offer of the seven percent stake is made 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.
Both the government and NNT later agreed to settle their difference through an international arbitration. But, no decision has so far been made.
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)