Update1: Govt files arbitration against Newmont
Monday, March 3 2008 - 08:29 AM WIB
The government has filed a request for arbitration against PT Newmont Nusa Tenggara (NNT), the subsidiary of American mining giant Newmont Corp., threatening to revoke its contract following its failure to meet its contractual divestment obligation.
?The arbitration request was filed at 1.20 p.m. today (Monday) with the international arbitration court,? Director General of Mineral, Coal and Geothermal Resources at the Ministry of Energy and Mineral Resources Simon F. Sembiring said on Monday.
The arbitration request was filed with the United Nations Commission on International Trade Law (UNCITRAL).
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said NNT?s failure to carry out its divestment obligation was a ?fatal mistake?.
?We shall terminate its contract once the arbitration panel decides (on favor of the Indonesian government),? Purnomo said.
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 the end of 2007, the company should have divested 10 percent of its shares as part of the mandatory divestment program.
The company is owned by Newmont Mining Corp (45 percent), local company PT Pukuafu Indah (20 percent) and a consortium led by Sumitomo (35 percent).
After delaying the divestment for years, NNT recently admitted that it had used its ownership in the copper and gold mine as a collateral for loans from banks ? which made it difficult for the firm to divest its shares. The firm claimed it had got approval from the government to use the ownership as collateral for loans.(Godang)