Newmont offers three percent stake to private companies

PT Newmont Pacific Nusantara (NPN), the Indonesian holding company of American mining giant Newmont Corp., said it has decided to sell three percent stake in the company's copper and gold mining unit PT Newmont Nusa Tenggara (NNT) to Indonesian private companies following its failure to reach agreements with the local governments in West Nusa Tenggara Province,Kompas reported Wednesday.

 

NPN’s president director Martiono Hardianto said in Jakarta Tuesday that the divestment to the private firms is pending an approval from the company's shareholders in Denver, the United States, and Tokyo, .

 

A source told the daily that the divestment would be officially announced next week.

 

The private companies include state-owned enterprises, province-owned enterprises or a company under the government’s sponsorship.

 

Last week, the local governments of West Nusa Tenggara (NTB) province has rejected the divestment option offered by NNT. NTB governor Lalu Serinata said that the offer was rejected because all of the royalties to be received would be used to pay the loan package offered by Newmont, while the additional cash of US$333,333 to be given by the company would be too small.

 

Meanwhile, Sumbawa regency has yet to respond to the proposal and West Sumbawa regency needs one month to reevaluate the divestment option.

 

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). (*)