The State Ministry of State Enteprises has been in intensive talks with the US Newmont Mining Corp. over it’s obligatory local divestment of shares.

State Minister for State Enterprises Sofyan Djalil said Tuesday that there were intensive talks going on between PT Newmont Pacific Nusantara president director Martiono Hadianto and deputy minister for mining, strategic industry, energy and telecommunication Sahala Lumban Gaol over the obligatory divestment of shares in the local subsidiary of the giant copper and gold mining firm PT Newmont Nusa Tenggara (NNT).

“But I have not yet received any reports from Sahala on the details of their discussions,” he said.

Martiono, whose office manages Newmont’s exploration, taxes and government relations in Indonesia,  has been visiting the ministry since Monday.

However, he refused to comment  on the results of  discussions so far.

A Geneva-based international arbitration court, the United Nation Commission on International Trade Law (UNCITRAL) made a judgement on March 31 requiring NNT to divest 17 percent of its shares, with the first priority offer going to the government, within 180 days, starting on April 1.

The ruling stems from a mining contract in 1986, requiring  shareholders to gradually reduce their stakes in NNT to 49 percent by 2010.

Newmont owns 45 percent of NNT, Sumitomo Corp. owns 35 percent and PT Pukuafu Indah, a private Indonesian company holds the remaining 20 percent.

NNT overseas shareholders are now supposed to sell three combined stakes  as stipulated, starting with 3 percent for 2006 for US$109 million, 7 percent for 2007 for $426 million, and another 7 percent for 2008 for $348 million, according to the ministry.

Sofyan said he had sent a letter to the Finance Ministry requesting approval for the possibility that state companies could purchase the shares, unless in the alternative the government agreed to purchase them using state funds.  

“I haven’t received any reply from the Finance Ministry. But before we can buy the shares, we must ensure that they are (legally) ‘clean’,” he said, adding that until now he had failed to find out whether  the shares were unemcumbered.

However, the shares to be divested have been put up by NNT shareholders as collateral for $1 billion in loans from overseas financing companies. The loans have been used to develop NNT mining activities.

State lawyer Joseph Suwardi Sabda, who deals with the NNT case, said last week the company’s shareholders must immediately clear the shares to be divested of collateral obligations before the government or firms appointed by government  can be legally enabled to purchase them.

Aside from this legal problem, Sofyan also said his office would also try to negotiate the final prices to be offered for the shares.

“If we have decided to purchase the shares, surely we want the price to be reasonable, but we have not decided on the details yet,” he said.

Last week, secretary to the State Ministry of State Enterprises Said Didu said that the government might request the state mining companies to form a consortium along with regional administrations to acquire the divested shares.

Said said the consortium could include nickel and gold producer PT Aneka Tambang, coal producer PT Tambang Batubara Bukit Asam (PTBA) and tin miner PT Timah.

The Finance Ministry’s director general of state wealth Hadiyanto   said the ministry had requested the government’s investment center agency to conduct a feasibility study on the proposed share purchase.

“We are still studying the costs and benefits of the shares,” he said.

He also said that aside from the state investment agency, the State Ministry of State Enterprises was also making its own study, which would later be looked at alongside those of the Finance Ministry.  (fmb)

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