Newmont offers 7% stake for $348m

PT Newmont Nusa Tenggara (NNT), the Indonesian unit of the US mining giant Newmont Corp. has offered 7 percent of its shares for 2009 period to the government for US$348 million as part of the mandatory divestment program. Investor daily reported Tuesday.

NNT spokesman Rubi W Purnomo said that the offer which was submitted to the government last week, several days ahead of the March 31 deadline, was in line with the contract of works (CoW) signed by the company in December 1986.

?We hope we can soon meet with the government representatives to discuss the offer,? Rubi said.

NTT is 45 percent owned by Newmont Corp., a consortium led by?s Sumitomo 35 percent and 20 percent by local company PT Pukuafu Indah.

Under their CoWs, foreign mining companies are required to divest up to 51 percent of their shares to local parties after five years of commercial production.

However, NTT is only obliged to sell a 31 percent stake because its local partner has already held 20 percent stake.

According to contract, a 3 percent interest should be divested in 2006, 7 percent in 2007 and another 7 percent in the next three years until 2010.

Newmont offered the 3 percent stake for $106 million and the other 7 percent for $282 million. The dispute over the pricing of the shares and over the potential buyers appointed by the government to buy the shares had resulted in the delay in the divestment of the 10 percent shares.

As a series of negotiations held by the government and Newmont to settle the dispute had failed, both parties finally agreed to settle their difference through international arbitration, which is expected to soon announce its verdict.

Separately, Bambang Setiawan, the Director General of Mineral, Coal and Geothermal at the Ministry of Energy and Mineral Resources, confirmed Monday that his office had received the offer.

He said that the government would first assess the offering price for the 7 percent stake before making a formal reply. ?A government team will evaluate the price next week,? he said.

Bambang said the government would first renegotiate the offer with Newmont before submitting it to the Finance Minister, who will decide whether or not to accept the offer.

According to Bambang, any decision to be taken by the government would also depend on the arbitration verdict related on the sales of the other 10 percent stake.

Meanwhile, Jusuf Merukh, the president director of PT Pukuafu Indah, said that his company should be allowed to buy the 7 percent stake if the government -- the central or local governments -- rejected the offer.

He cited as reasons the fact that the firm had already a 20 percent stake in the firm and is the signatory of the CoW.

He also said his firm had secured $2.5 billion-$3 billion funds from BNP Paribas to buy the stakes to be divested by the firm. (*)