UPDATE: Indonesia Min: Government Aims To Buy 21% Of Newmont Unit
April 21 2009 - 5:47AM
Dow Jones News
The Indonesian government aims to buy a 21% stake in Newmont
Mining Corp.'s (NEM) local unit that is due for divestiture,
possibly as early as this year, the minister for state-owned
enterprises' affairs said.
"If we can legally acquire that much (of the unit), we will take
it," Sofyan Djalil told reporters Tuesday.
He added that the Finance Ministry is reviewing possible methods
by which the government can buy the stake in PT Newmont Nusa
Tenggara, which operates Batu Hijau, one of the world's largest
copper and gold mines, located on Indonesia's Sumbawa island.
Under its contract of work with the Indonesian government,
Newmont was scheduled to sell 3% of the local unit, known as PTNNT,
to Indonesian parties in 2006, and a further 7% every subsequent
year to 2010.
The 3% stake due for divestiture in 2006, and 7% in 2007, are
earmarked for local governments near the mine site, with the
central government holding first right of refusal over the
remaining 21% to be divested by next year.
The government "will exercise our rights up to 2010," Djalil
said. He said the government has requested that Newmont this year
divest its 7% due in 2010.
Djalil didn't elaborate on a time frame for the purchases.
However, international arbitrators on March 31 gave Newmont a 180
day deadline to complete the sale of the 17% of PTNNT that was due
in previous years.
Djalil said the government is looking at the possibility of
forming a consortium of state-owned enterprises to buy the Newmont
shares.
He said such a consortium could seek loans in order to fund the
purchase, but didn't elaborate.
Djalil has said in the past that nickel miner PT Aneka Tambang
(ANTM.JK), coal miner PT Tambang Batubara Bukit Asam (PTBA.JK), tin
producer PT Timah (TINS.JK) or other state-owned firms could buy
the stake in PTNNT.
Government Wants Pledge Arrangement Removed
Djalil said the government has requested Newmont to remove a
pledge agreement from the shares before they are divested. Under
the agreement, shares in PTNNT are pledged as collateral to
Newmont's senior lenders on the Batu Hijau project.
Newmont filed for arbitration in 2007 to avoid being found in
default of its contract, after it missed the deadline to sell 3% of
PTNNT in 2006 and 7% of the unit in 2007, claiming the government
had blocked the sales.
It then filed for further arbitration last year claiming the
government was again blocking sales of the unit - including the
further 7% scheduled for divestiture in 2008 - on the basis that
the pledge agreement with Newmont's lenders meant the shares
couldn't be sold.
Newmont and the Indonesian government said last month the
arbitrators had ruled Newmont and minority partner Sumitomo Corp.
were in default over the delayed stake sales and must move quickly
to divest them.
At the time, Minister for Energy and Mineral Resources Purnomo
Yusgiantoro indicated the arbitrators had overruled Newmont's
request to be allowed to leave the share pledge in place. However,
Newmont has yet to comment on the matter. Newmont officials have
said the share pledge arrangement is legal and isn't an obstacle to
divestiture. Newmont officials couldn't be reached for comment
Tuesday.
Local media reported that Newmont has offered the 7% of PTNNT
due for sale last year at $426 million and the 7% stake due to be
divested this year at $348 million.
-By Linda Silaen and Reuben Carder, Dow Jones Newswires; 62 21
3983 1277; Reuben.Carder@dowjones.com