NTB, Sumbawa to form consortium to buy seven percent Newmont shares

West Nusa Tenggara (NTB) provincial administration and the Sumbawa regency administration are seeking to buy a seven percent stake in PT Newmont Nusa Tenggara (NNT), Kontan reported on Wednesday.

 

Manggaukang Raba, the spokesman for the NTB province, said on Tuesday that the local government had decided to buy the seven percent stake in the copper and gold mining company after the central government refused to use its right to purchase the stake.

 

He said that the NTB provincial administration would team up with local company PT Gerbang Emas, while the Sumbawa regency will cooperate with a number of local companies to buy the stake.

 

According to him, the local governments and the local companies will then establish a consortium with PT Bumi Resources Tbk to buy the shares which are worth about US$282 million.

 

"There has been an agreement (with Bumi Resources), but we can't unveil it now," he said, while refusing to reveal the share composition in the consortium.

 

Under the contract of work, NNT is required to gradually divest up to 51 percent of its stake after twenty years of production to either the central government, local governments, state owned enterprises or Indonesians-controlled firms. Since the company is originally 20 percent owned by Indonesian company PT Pukuafu Indah, NNT is required to divest up to 31 percent of its stake.

Last year, the firm offered a 3 percent stake, but the central government refused to buy the stake, offering it to the local governments. The West Sumbawa regency administration has started selecting companies that will provide it with funds to buy the stake.

 

This year, NNT is offering another 7 percent stake. While some reports say the central government has also refused to buy the stake, State Minister of State Enterprises Sofyan Djalil said on Sept. 17 said that the central government was interested to buy the stake and could buy the stake directly or through state owned enterprises.

 

In March 2007, Bumi Resources, which is controlled by State Minister of Public's Welfare Aburizal Bakrie, signed a memorandum of understanding (MoU) with the NTB provincial and West Sumbawa regency administrations to purchase the ee percent stake in NNT. Of the three percent stake, 85 percent will go to Bumi and the remaining 15 percent is to be owned by the local governments, according to the MOU. (*)