Newmont offers risk-free loan to local government to buy subsidiary stake

PT Newmont Pacific Nusantara, the Indonesian holding company of American mining giant Newmont Corp., offered to provide risk-free loans to the local governments of West Nusa Tenggara province and regencies of West Sumbawa and Sumbawa Besar to buy 10 percent stake in the company’s affiliate PT Newmont Nusa Tenggara (NNT). 

 

Martiono Hadianto, the president director of PT Newmont Pacific Nusantara, said in Jakarta Wednesday that the local governments would be allowed to repay the loans with dividends they would receive from NNT. "If there is no dividend, they don't have to pay debt installment. In case of force majeur before the loans are fully repaid, the debt will be written off," he said.

 

At a press conference Wednesday, Martiono said that the divestment of the 3 percent shares should be made under the same package with the other 7 percent shares. NNT and the government have agreed that the value of the 7 percent shares at US$ 282 juta and the 3 percent shares at $109 million.

 

The Ministry of Energy and Mineral Resources earlier set a target until February 2007 for the completion of the divestment of three percent of NNT’s stake, but the process has yet to be completed.

 

"We are optimistic that the divestment of the 10 percent shares can be carried out this year," he said. 

 

In addition, the local governments would also be given a cash of US$333,333 for every percent of the shares they would own a year for the empowerment of the local communities.

 

Martiono emphasized that the risk-free loan would be given if the local governments agreed not to cooperate with private companies to buy 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 March 2008, the company should divest 10 percent of its shares as part of the mandatory divestment program.

 

Current 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). (Bernard)