T

he government signed an agreement with miner PT Newmont Nusa Tenggara (NNT) valuing the firm’s 7 percent final divestment shares at US$246.8 million, nearly 10 percent off the offer price of $271.6 million.

State investment agency PIP chairman Soritaon Siregar on Friday signed the agreement with NNT president director Martiono Hadiyanto and representatives from US mining giant Newmont Mining Corporation (NMC) and Sumitomo’s Nusa Tenggara Mining Corporation (NTMC) as stakeholders of the firm, which runs the nation’s largest copper mine, Batu Hijau.

The executives and government officials did not elaborate on the pricing process, but NNT’s Martiono claimed “everything was been done accordingly”.

Following the agreement, NNT is now 49 percent owned by foreign firms NMC and NTMC and the remaining 51 percent by local parties: the PIP (7 percent), Pukuafu Indah (17.8 percent), Indonesia Masbaga Investama (2.2 percent) and Multi Daerah Bersaing, a joint venture between Bakrie Group’s Multicapital and the West Nusa Tenggara provincial administration, which owns the remaining 24 percent.

“Local ownership [of the mine] stands a 51 percent, a great composition. The government, along with the other local owners, will make the foreign partners proud,” Finance Minister Agus Martowardojo said at the signing ceremony at his office in Jakarta.

“The government’s 7 percent share will be used to develop NNT’s business toward becoming a world-class company with good governance and added value for the country, environment and stakeholders.”

The sale was made despite protests from the West Sumbawa and West Nusa Tenggara administration.

“Companies don’t have the luxury of choosing which stakeholder they prefer. This is the government’s policy,” Martiono said after the signing event. At a hearing at the House of Representatives, apparently unaware of the agreement, a mining analyst and a legislator criticized the government’s decision to take the final divested shares, saying the provincial administration should have received it for reasons of social justice.

Satya Wirayudha, a member of the House Commission VII on energy and mineral resources affairs, said the House had issued a letter to the President to prevent the Finance Ministry from purchasing the shares as the ministry played more than one role in the matter.

“If the government views NNT as a strategic business and national asset, it should give state-owned national or regional firms in West Nusa Tenggara the opportunity to purchase the remaining 7 percent,” he said at the hearing.

Mining expert Kurtubi urged the central government to allow the West Nusa Tenggara administration to purchase the remaining shares.

“The province has rich resources but a bigger portion of the exploitation goes to the central government,” he said, saying the province received only 4 percent of NNT’s 2010 tax payments of $606.5 million and $29.5 million in royalties.

NNT announced Friday it paid the government Rp 1.36 trillion in the first quarter of 2011 to fulfill its financial obligations for tax, non-tax and royalty payments.

“NNT always fulfills its financial obligations to the government punctually and complies with all taxation regulations. Since 2003, NNT has been deemed an abiding taxpayer by the government,” NNT spokesman Arif Perdana Kusumah said in a press statement.

The payments comprised Rp 974.4 billion in institutional income tax, Rp 140 billion in other income tax, Rp 113.6 billion in interest, dividends and royalty taxes and Rp 48 billion in individual income tax.

The company also pays a production royalty of Rp 43.52 billion comprising Rp 17.16 billion for copper production, Rp 22.54 billion for gold and Rp 1.99 billion for silver.

Rangga D. Fadhillah contributed to this story from Jakarta