NTB authorities reject Newmont's divestment option

The local governments of West Nusa Tenggara (NTB) province and regencies of West Sumbawa have rejected the divestment option offered by copper and gold miner PT Newmont Nusa Tenggara (NNT), Kompas reported Wednesday.

 

NTB governor Lalu Serinata said in Mataram Tuesday that his office had sent an official letter to NNT to reject the divestment option offered by the mining company.

 

He 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.

 

"Even if the royalties are added, the local governments would not be able to settle the loan until 2023 when the Newmont’s contract ends," he said.

 

NNT has offered a 10 percent stake to the local governments of West Nusa Tenggara (NTB) province, and regencies of West Sumbawa and Sumbawa Besar as part of its mandatory divestment program. The company also offered a risk-free loan to pay the purchase of the shares to the local governments.

 

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

 

According to its contract of work signed in 1986, NTT is required to divest at least 51 percent of its stake to local investors by 2010. The company should have divested three percent of its stake in 2006 and another seven percent this year.

 

NNT public relations manager Kasan Mulyono said that he could not comment about the rejection because the company had not received the letter from the NTB governor. (*)