The time-consuming negotiations over the divestment plans of PT Newmont Nusa Tenggara (PT NNT), a local subsidiary of US mining giant Newmont Corp., has developed further with the government determined to value PT NNT assets below market price.

“PT NNT’s listed assets value  [at the New York Stock Exchange] is US$3.8 billion. We will not value the assets higher than the  figure because we don’t  want people of Indonesia to pay more than the market price,” Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters Wednesday.

The government and Newmont’s long negotiation on assets value is in a bid to find a base price for the shares planned to be divested.

Under the 1996 contract, Newmont was required to sell a total of 31 percent of its stake in PT NNT to the government, the regional government, state-owned companies, or domestic private companies.

Purnomo said Newmont’s latest proposal for the assets value was somewhere between $3.8 billion and $4 billion.

He refused to mention the exact value proposed by the government.

“The negotiations [have successfully] narrowed the gap [between the government’s valuation and Newmont’s valuation] to about $300 million. “The government will continue bargain the value as low as possible.”

He added the value disagreement was centered around the differences in forecasting the future prospect of the NNT’s Batu Hijau mine in West Nusa Tenggara, Indonesia’s second-largest copper mine.

However, despite the $300 million gap, Purnomo said he was optimistic that the government and Newmont would reach an agreement on the value by next week, as the gap was getting smaller.

Once the value of the assets has been agreed by both parties the shares prices can also be known, he added.

“Then, we will give the value to the finance minister who will take the decision. We expect the minister will come out with the decision by August 1.”

Newmont secured the mining contract for NNT in 1986.

Of the required 31 percent divested stakes,  3 percent must be offered to the government in 2006, and 7 percent every year between 2007 and 2010.

The March 31 arbitration panel reinforced the contract ruling that Newmont to sell 17 percent stake in NNT — covering the divestment in 2006, 2007, and 2008 within 180 days, meaning that the divestment must be done by the end of September.

The 2006 and 2007 shares were divested to the provincial government of West Nusa Tenggara.

Now, the provincial government is opening a contest seeking domestic private companies to secure finance for the plan.

The central government is evaluating buying the 14 percent shares that were supposed to be divested in 2008 and 2009.

Although the negotiation is time-consuming, Purnomo said he believed the government would not miss the 180 days divestment target ruled by the panel.

“The 180 days is not the deadline for the final transaction of the acquisition, but the deadline to determine who will buy the shares.”

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