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Newmont told to repay debts
Following a deadlock in negotiations last Friday, the government told PT Newmont Nusa Tenggara on Monday to pay its debt in order to scrap liabilities on shares
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Following a deadlock in negotiations last Friday, the government told PT Newmont Nusa Tenggara on Monday to pay its debt in order to scrap liabilities on shares.
"Newmont must settle their debts with the two banks in Japan and Germany before it can continue with the divestment plan," Director-General for Geology and Mineral Resources Simon Sembiring told The Jakarta Post.
The company used its shares as collateral in $1 billion worth of loans from the Export Import Bank of Japan and Kreditanstalt fur Wiederaufbau in Germany, which makes it impossible for the company to divest 10 percent of its shares to local governments, as demanded by the 1986 contract.
"Newmont admitted their inconsistencies in complying with the contract," Simon said.
"Right now they are ready and willing, but they are not able to continue with the divestment."
Head of the Investment Coordinating Board (BPKM) Muhammad Lutfi said NTT needed to provide approval from its senior lenders before it could continue with anything else.
"Without approval, they won't be able to do anything with the stake, and the provincial government can't buy it," Lutfi said.
The company failed to meet the government's deadline to divest a 10 percent stake by the end of 2007, as regulated under the contract, which says NTT is to gradually sell 51 percent by 2010.
A letter from the government, sent on Feb. 10, mandated the divestment to be completed by Friday -- a deadline the company did not meet.
In a letter sent to Energy and Mineral Resources Minister, Simon said he recommended a revocation of the firm's permit to operate the gold and copper mine in Batu Hijau, West Nusa Tenggara.
Final results of negotiations were still under embargo Monday night.
NTT spokesperson Rubi W. Purnomo told a press conference the company had pushed for a meeting with the government since early Monday morning.
"The meeting was finally held this afternoon, attended by the Director General for Geology and Mineral Resources Simon Sembiring," NTT spokesperson Rubi W. Purnomo said.
He said a conference on the final results was scheduled for Tuesday.
Earlier on Sunday, Blake M. Rhodes, vice president and chief counsel of Newmont Mining Corp., which holds 45 percent of NTT, said the divestment plan was put on hold as due diligence processes needed to be carried out on the possible buyers.
Possible buyers included Sumbawa regency, West Sumbawa regency, West Nusa Tenggara provincial government.
He said the company was responsible to gather information on the new shareholder's status and origins, as well as where they had secured financial funds.
Simon said the problem was not in the requirement for due diligence, but around Newmont's decision to use the shares as collateral.
"Before they settle their debts with the lenders, negotiations will go nowhere," Simon said. He refused to disclose the new deadline set for the company. (lva)
