Newmont shares purchase key to contract renegotiation: Govt

Finance Minister Agus Martowardojo again defended the finance ministry?s plan to buy a seven percent stake in PT Newmont Nusa Tenggara (NNT), saying that the purchase would become an entry point for the government to learn the mining industry so that it would have more mining knowledge in renegotiation of contract of works (KK) currently held by world?s major mining companies.

Speaking during a hearing at the Constitution Court in Jakarta, Agus said that the country?s mining industry had been marred by many problems ranging from overlapping mining areas, low tax compliance and serious environmental problems.

The minister said that the purchase of Newmont shares would therefore give the government an access to learn about the problems. ? By knowing the real problems in the industry, the government will be able to create a pattern which could be applied in renegotiation of KK contracts,? he said as quoted by Investor Daily.

The finance ministry through its investment agency has reached an agreement to buy a seven percent stake in NNT, a part of the 51 percent shares which have to be divested by NNT?s foreign shareholders as part of the mandatory divestment program.

However, the purchase of Newmont shares has been opposed by House of Representatives and supreme audit agency (BPK). The House insisted that the ministry should first seek approval from the House to purchase the shares, while BPK said that the purchase violated the procedures.

Due to the opposition, the finance minister then brought the case to the Constitution Court to seek a fair solution. (*)