Central govt backs down from acquiring shares in NNT

Alfian ,  The Jakarta Post ,  Jakarta   |  Thu, 11/19/2009 10:54 AM  |  Business

The central government has backed down from a plan to purchase a stake in copper producer PT Newmont Nusa Tenggara (NNT) from US mining giant Newmont Corp, opening the way for a consortium of regional governments and a private partner to buy it.

The decision was made after state mining firm PT Aneka Tambang refused to represent its shareholder  (the government) in acquiring shares in NNT due to disagreement with PT Multi Daerah Bersaing (PT MDB) over the proposed division of the shares.

PT MDB is a joint venture between PT Daerah Maju Bersaing – a business consortium representing the Nusa Tenggara Barat province, Sumbawa Regency and West Sumbawa Regency -- and PT Multicapital, an investment subsidiary of PT Bumi Resources, one of Indonesia’s biggest energy producers.

A 1986 contract between Newmont and the Indonesian government says the US company must divest 31 percent ownership in NNT to either the central government, regional governments or designated state or private firms by 2010.

The 10 percent stake was already divested last week with PT MDB acting as the buyer by paying
$391 million. The remaining 21 percent is to be divested in two tranches, 14 percent this year and 7 percent next year.

Initially the government wanted to take part in acquiring the remaining 21 percent shares in NNT through Antam.

Bambang Setiawan, a director general for coal, mineral and geothermal at the Energy and Mineral Resources Ministry, said Antam rejected a proposal from the regional governments on the division of the 21 percent stake.

Antam demanded a 15.5 percent ownership in NNT, equaling to half of the 31 percent to be divested by Newmont, whereas the regional governments, through PT MDB, insisted that the state company would only be entitled to 11.6 percent.

However, the latter fall-back position also failed, Bambang said. He added that the government could not bridge the gap between Antam’s interests and the regional government’s interests.

Bambang said he will now send a letter to Newmont notifying them that PT MDB has been given a green light by the central government to go ahead with the acquisition of 14 percent of shares in NNT.

The sale and purchase agreement for the 14 percent stake is expected to be signed on Nov. 23.

Under an agreement with the regional government, PT Multicapital will come with $493.6 million for the whole of the 14 percent stake and then split it, 75 percent to PT Multicapital and 25 percent for the three regional governments.

The same financing scheme was adopted earlier for the acquisition of the first 10 percent stake in NNT.

NNT operates the Batu Hijau mine, Indonesia’s second largest copper mine after the Freeport mine in Papua.

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