S

hare prices of publicly listed oil and gas company Medco Energi Internasional plunged on Friday following discouraging reports regarding the plan of its owner, Arifin Panigoro, to acquire a majority share of the local unit of the US-based mining company Newmont Corp.

Medco shares lost 10 percent to close at Rp 1,170 on Friday after a sharp gain in the previous day amid newspaper reports that Panigoro would acquire a 76 percent stake in PT Newmont Nusa Tenggara (NNT), which operates the Batu Hijau copper-gold mine on the island of Sumbawa in the province of West Nusa Tenggara. On Thursday, Medco shares rose 25 percent in the morning trade to Rp 1,450, but dropped in afternoon trade to end the day at Rp 1,300, rising only 12 percent.

Reuters reported on Thursday that Newmont'€™s discussions with firms potentially interested in acquiring its Indonesian unit had not met its '€œsales criteria'€. '€œNewmont receives expressions of interest in our assets from time to time, and consistent with our goal to improve our portfolio and balance sheet, we may consider proposals to acquire our assets,'€ Omar Jabara, the company'€™s spokesman, said as reported by Reuters. '€œTo date, no discussions related to our assets in Indonesia have met all of our sales criteria, which include fully committed funding representing fair value,'€ he said, without naming any companies.

'€œThe deal has not been closed. It is still in the process,'€ Energy and Mineral Resources Minister Sudirman Said told reporters on Friday.

Sudirman acknowledged that Newmont and Panigoro had been in '€œcommunication'€ with his ministry for four months regarding the acquisition plan. '€œThey have to communicate with us. However, the details are a business to business matter. Our job is to ensure that they fulfill all regulations,'€ said Sudirman.

Sudirman'€™s comment was made following media reports that Panigoro intended to acquire a 76 percent stake in Newmont Nusa Tenggara from its current shareholders.

Newmont Nusa Tenggara is currently 56 percent-owned by Nusa Tenggara Partnership BV, a joint venture between Newmont Mining and Japan'€™s Sumitomo Corp. Another 17.8 percent is owned by PT Pukuafu Indah, 24 percent is held by PT Multi Daerah Bersaing '€” which is a joint venture between the local administration'€™s firm with a company related to politically wired Bakrie family- and 2.2 percent by PT Indonesia Masbaga Investama.

Panigoro'€™s interest was announced earlier this week by Coordinating Maritime Affairs Minister Rizal Ramli. The Energy and Mineral Resources Ministry should be organized under Rizal'€™s ministry. However, the ministry and the Office of the Coordinating Maritime Affairs Minister have failed to synchronize each other, resulting in overlapping policies, such as seen with the implementation of 35,000 megawatt electricity procurement program and the development of gas-rich Masela block.

According to Rizal, Panigoro plans to purchase the stake for US$2.2 billion. Upon completion of the acquisition, Panigoro will make the firm establish a copper smelter with a capacity of 500,000 tons per year. It remains unclear whether Panigoro will use its existing business portfolio or establish new arms for the acquisition.