Newmont files new arbitration over divestment

Copper and gold miner PT Newmont Nust Tenggara (NNT), an Indonesian unit of U.S mining giant Newmont Mining Corp. filed for an arbitration for a second time in a dispute with the government over divestment program.

NNT?s Public Relations Manager Kasan Mulyono said in a statement Friday that the second arbitration request was filed in compliance with the contract and in response to the letter dated June 2008 from Simon Sembiring, the Director General of Mineral, Coal and Geothermal Resources at the Energy and Mineral Resources Ministry.

In the letter, Simon warns that NNT would be declared default if the shares NNT offered for sale in March 2008 and other shares offered in 2006 and 2007 are not yet under the control of the Government of Indonesia and/or legal entity owned by the government by July 13, 2008.

"We are ready if they file another arbitration request," Simon said on Friday.

He also said that the government will seek compensation from NNT for its potential revenue losses due to the NNT`s failure to divest its shares since 2006

"We are studying the company`s financial reports since 2006 to enable us to calculate the country`s revenue loss potential," he said.

As part of the initial phase of the divestment program, NNT should have sold a 10 percent stake in 2006 or 2007. NNT however failed to carry out the program.

The 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. In March, both parties agreed to settle the dispute over the sale of the 10 percent stake in an arbitration court.

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 have divested 10 percent of its shares as part of the mandatory divestment program.

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)