Govt will not use state funds to buy Newmont shares: Hatta

The government has financially decided to buy the remaining 7 percent of Newmont Nusa Tenggara (NNT) shares which have to be divested by the company?s foreign shareholders this year despite protests from the local government and opposition from the House of Representatives (DPR).

Coordinating Minister for the Economy Hatta Rajasa said in Jakarta on Thursday that he had received a report from Finance Minister Agus Martowardojo about the decision.

Hatta said that the government would not use state funds in buying the Newmont shares because the government would appoint state investment agency Pusat Investasi Pemerintah (PIP) to buy the shares.

?The Finance Minister had formally told the energy and mineral resources ministry as well as Newmont about the plan,? he said.

NNT operates a gold and copper mine in Sumbawa, West Nusa Tenggara. Under a mining contract signed in 1986, the mining company?s foreign shareholders, Newmont Indonesia Limited (NIL) and Nusa Tenggara Mining Coorporation (NTMC), an affiliate of Japans Sumitomo Corporation, are required to divest 31 percent of their shares to local investors.

According to the contract, the government has the emptive rights to buy the shares that would have to be divested. The shareholders can sell the shares to other local parties, only after the government has formally declined the offer.

In the previous divestment, the central government has appointed the local administration as the buyer, which then formed a joint venture with PT Multicapital, a business unit of coal giant PT Bumi Resources, to take over the shares.

NNTs foreign shareholders have so far sold 24 percent of the shares to the joint venture called PT Multi Daerah Bersaing (MDB).

The Ministry of Energy and Mineral Resources and NNT had agreed to fix the price of the 7 percent shares at US$271.6 million. The pricing was based on the calculation of the company?s total assets which are worth $3.88 billion.

The government?s plan to buy the remaining 7 percent of Newmont shares has angered the local government which had been appointed by the central government as the buyers for the shares divested by Newmont in the previous years. The House had also protested the plan, asking the finance minister to name the local government as its buyer. (*)