Government, Newmont may settle divestment plan today

Ika Krismantari , The Jakarta Post , Jakarta | Fri, 02/22/2008 5:00 PM | Business

PT Newmont Nusa Tenggara's divestment saga is taking a promising turn at last, with a meeting this Friday scheduled to attempt a settlement.

After failing to sell a 10 percent stake by the end of 2007 as required under a 1986 contract, the company had been given a new deadline of Feb. 22 to finalize the sale or face contract termination.

However, director general of geology and mineral resources at the Energy and Mineral Resources Ministry, Simon Sembiring, told The Jakarta Post the ministry would meet with the company along with the three local governments Friday to try to settle the divestment row.

"We hope we can reach a deal tomorrow (Friday)," Simon said after a meeting with the company's representatives Thursday.

The three local governments where the company's mine is located are Sumbawa regency, Nusa Tenggara provincial administration and West Sumbawa regency.

Of the 10 percent stake, Sumbawa regency might buy a 3 percent stake, while Nusa Tenggara provincial government and West Sumbawa regency are to jointly purchase the remaining 7 percent.

Newmont spokesman Rubi W. Purnomo confirmed the positive results of Thursday's meeting, saying "the talks were amicable and resulted in good progress".

"The talks will continue tomorrow and the company remains hopeful that we are progressing closer toward an agreement," Rubi said.

Should an agreement be reached Friday, it would spell the end of a much-publicized dispute that started less than two weeks ago when the ministry sent the company a default notice for failing to divest 10 percent of its stake by the end of last year.

The letter also set the new Feb. 22 deadline and threatened a contract termination.

Denying any wrongdoing and blaming prolonged negotiations with the local governments for its failure to meet the original schedule, Newmont had said it was considering taking the dispute to an arbitration tribunal.

But Simon made it clear Thursday that no contract termination would be required if the Friday meeting resulted in an agreement.

Under the 1986 contract, the company is required to gradually sell its stake to local parties, which could include the central government, local governments or companies owned by Indonesians.

By the end of 2010, the company is scheduled to have divested a 51 percent stake, the contract says.

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