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Bumi unit eyes 31% Newmont stake
Three local governments and a PT Bumi Resources subsidiary, already in the process of buying a 10 percent stake in PT Newmont Nusa Tenggara (NNT), seek to acquire a further 21 percent stake in the firm
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Three local governments and a PT Bumi Resources subsidiary, already in the process of buying a 10 percent stake in PT Newmont Nusa Tenggara (NNT), seek to acquire a further 21 percent stake in the firm.
NNT is a local unit of US mining giant Newmont Corp.
Last Saturday, a consortium comprising the West Nusa Tenggara provincial administration, Sumbawa regency and West Sumbawa regency administrations chose PT Multicapital to finance the acquisition of a 10 percent stake in NNT, which will cost US$391 million.
West Nusa Tenggara Governor M. Zainul Majdi said the consortium and Multicapital would now team up again to try to increase their ownership in NNT to 31 percent.
“We have 14 days to sign the agreement [for the 10 percent stake]. Once the agreement has been signed, the company [Multicapital] will continue to be our partner to get all NNT shares that are currently being divested, not only the 10 percent shares, but up to 31 percent,” Zainul said Monday.
West Nusa Tenggara mining office head Heryadi Rachmat confirmed Zainul’s statement.
“We and Multicapital are keen to get the remaining shares,” he said.
West Nusa Tenggara Provincial government expects the regional administration to get all NNT’s divested shares, Zainul said.
The deal would benefit the regional community, he added.
“We have written to the President, Finance Ministry and the Energy and Mineral Resources Ministry.
“We expect the central government will approve this,” Zainul said.
Based on a 1986 contract, Newmont must gradually sell a total of 31 percent of its stake in NNT to the government, or to local parties designated by government, in a divestment process scheduled for completion by 2010.
An arbitration panel reinforced this contract on March 31, stipulating that Newmont must now sell a 17 percent stake in NNT (covering divestments for 2006, 2007 and 2008) to the government, or parties it appoints, including local governments, within 180 days.
The divested stakes in 2006 (3 percent) and 2007 (7 percent) are to be sold to the regional government, while the central government is currently in talks with Newmont over the possibility of buying the 7 percent stake in 2008 and another 7 percent 2009.
The central government and Newmont have long been in negotiations following a disagreement over the value of NNT’s assets to be used to determine the cost of divested shares.
Energy and Mineral Resources Minister Purnomo Yusgiantoro last week said the gap between the government’s and Newmont’s valuation was at about $300 million.
At that time, Purnomo said that the government would not value the assets at more than $3.8 billion, while Newmont’s latest proposal for the assets value was somewhere between $3.8 billion and $4 billion.
On Monday, Purnomo said the government would not value the assets higher than $3.76 billion.
“The gap is getting narrower. The government targetted to reach an agreement by the end of this week at the latest,” Purnomo said.
NNT runs Batu Hijau on Sumbawa island, West Nusa Tenggara, Indoensia’s second largest copper mine. Newmont owns a 45 percent stake in NNT. Sumitomo Corp., meanwhile, owns 35 percent and PT Pukuafu Indah, a private Indonesian company, holds the remaining 20 percent.
