PT Bumi Resources says it has not decided whether it will buy a further 7 percent stake in PT Newmont Nusa Tenggara (NNT), claiming the asking price is too high.
Dileep Srivastava, a director at Bumi, said Thursday that the price offered by NNT's foreign shareholders was doubled from that quoted in previous divestments.
"On a hundred percent basis, the asking price is double what we have paid for. So basically, we would rather unlock the value," Dileep said.
He added that Bumi had not made a decision on the matter. "We have to look very closely at whether we will need it. We have not reached any decision whether we should move forward on that," he said.
NNT, a subsidiary of the US mining giant Newmont Mining Corp, operates Indonesia's second-largest copper mine, Batu Hijau in West Nusa Tenggara.
Bumi spent US$867 million to acquire a 24 percent stake in NNT.
In April, NNT's shareholders offered another 7 percent of shares as part of its divestment obligation required by a 1986 contract. The 7 percent stake is priced at $444 million.
NNT spokesman Rubi W. Purnomo refused to comment on how company shareholders formulated the price.
Bumi entered NNT through its business unit, PT Multicapital, which has established as a joint venture with a West Nusa Tenggara administration-owned company to buy shares in NNT.
The joint venture, PT Multi Daerah Bersaing (MDB) - 75 percent owned by Bumi and 25 percent by the local administration company - has secured a 24 percent stake in NNT. Dileep said the acquisition brought benefits to Bumi. "Our investment in Newmont has been very strong. We invested $867 million. We are happy to say that we received $43 million in dividends last year," he said.
Other NNT shareholders are Newmont subsidary Newmont Indonesia Limited and Nusa Tenggara Mining Corporation, a subsidiary of Japan's Sumitomo, which own a combined 56 percent of the shares in NNT, and local mining firm PT Pukuafu Indah, which owns 20 percent.
The 1986 contract requires NNT's foreign shareholders to divest 31 percent of their shares to the government or local businesses. This means that NNT's foreign shareholders need to sell another 7 percent to be able to meet the requirement.
The government has formed a team to evaluate the price offered by NNT. "We are still negotiating *with Newmont*," Bambang Setiawan, the director general for minerals, coal, and geothermal, said. The divestment has to be completed this year.
Meanwhile, Bumi Resources shareholders approved Thursday a plan to sell new shares to creditors including China Investment Corp., Credit Suisse Group AG and JPMorgan Chase Bank NA to help Indonesia's largest coal miner repay debt.
Bumi will raise Rp 4.6 trillion (US$508 million) by selling 1.94 billion new shares at Rp 2,366 apiece.
