International arbitration has ruled in favor of Indonesia in a dispute concerning the obligatory sale of an NNT stake, which has pitted the government against PT Newmont Nusa Tenggara (NNT), the local unit of the US mining giant Newmont Corporation.
State prosecutor Joseph Suwardi Sabda said Tuesday, as reported by Antara, that the Geneva-based arbitration court had ruled that, "Newmont has to divest the 17 percent stake within 180 days from now" to the government or parties appointed by the government.
However, Joseph did not mention any legal decision on the disputed pricing issue.
Efforts to seek confirmation from Newmont in Indonesia failed so far.
NNT is currently 45 percent owned by Newmont Corporation, 35 percent by Sumitomo of Japan and 20 percent by local company PT Pukuafu Indah.
The dispute had centered on, among others, the pricing of the mandatory sale of the NNT stake under the agreed contract of works.
In Indonesia, Newmont and other foreign mining companies are required to divest up to 51 percent of their shares to local parties after five years of commercial production.
However, in this case NNT is allowed to only sell 31 percent of the mandatory divestment requirement because its local partner already holds 20 percent of its stake.
According to Newmont's contract of works, a 3 percent stake should be divested in 2006, 7 percent in 2007 and another 7 percent per year in the next three years until 2010.
Newmont offered the 3 percent stake for $106 million and the next 7 percent for $282 million.
However the dispute over the pricing of the shares and over the potential buyers appointed by the government to buy them led both parties to finally agree that they would settle their differences through international arbitration.
"If within 180 days Newmont has yet to divest the 17 percent stake, then the government can revoke the contract of works," Joseph said.
The 17 percent stake the arbitration judgement has referred to comprises the amount of stake that NNT had to sell in 2006 (3 percent), 2007 (7 percent) and 2008 (7 percent).
The deadline for the divestment of the 2008 contractual 7 percent stake fell on March 31.
Several days before the March 31 deadline, Newmont had actually offered this 7 percent stake to the government for $348 million.
Bambang Setiawan, the director general of mineral, coal and geothermal at the Energy and Mineral Resources Ministry, confirmed Monday that his office had received Newmont's 7 percent stake offer.
He said the government would first assess the offering price for the 7 percent stake in Newmont before making a formal reply.
Bambang, said that the government would first renegotiate the offer with Newmont before submitting it to the finance minister, who would be responsible for deciding whether to accept or reject the offer.