Newmont voices concerns over regent's shutdown threat

PT Newmont Nusa Tenggara (PTNNT) and its foreign shareholders are terribly shocked and disappointed to receive a letter issued by the Regent of Kabupaten Sumbawa Barat (KSB) stating that it will halt mining operations at Batu Hijau effective April 19, 2011 if its wish to purchase the 2010 7% divestiture shares is not approved by the National Government.

"The closing of PTNNT?s mining operations will hurt the government of KSB, employees, local businesses, and the shareholders of PTNNT and will delay community development programs, which will in turn hurt all parties. The closing order will potentially inflict losses upon the state and ruin the government?s efforts to promote the investment climate to support Indonesia?s economic growth set at 7.5% annually," said Martiono Hadianto, president director PTNNT, in a statement.

Martiono said that in relation to divestiture, PTNNT has fulfilled all of its obligations under the Contract of Work (CoW), which requires that the divestiture shares be offered first to the National Government.

"As such, KSB?s desire to acquire the shares offered is an internal matter between KSB government and the National Government. Both PTNNT and the foreign shareholders of PTNNT are not involved in this matter," said Martiono.

He added that the plan of the KSB regent to halt mining operations of PTNNT is unwise as this matter is not a dispute between KSB and PTNNT.

Furthermore, PTNNT contributes significantly to the national, regional and local economy through taxes, non-tax fees and royalty payments amounting a total of Rp 5,76 trillion or US$651 million in 2010 alone. PTNNT also spent $125.3 million in employee payroll, of which 63% are recruited locally from within the Nusa Tenggara province and the majority of those employees from the West Sumbawa district. In addition, the company spent $31.8 million in local purchases and contracts, and $7.5 million in community development projects.

?All relevant institutions that have received our report agree that the KSB?s plan to halt PTNNT?s mining operations is in conflict with the applicable government regulations and laws.

We expect that the Regent of KSB will rectify his plan and take wiser action in his efforts to buy the 2010 7% divestiture shares offered by PTNNT,? he concluded.

We expect that the Regent of KSB will rectify his plan and take wiser action in his efforts to buy the 2010 7% divestiture shares offered by PTNNT,? he concluded. (godang)