Oil and gas firm PT Medco Energi Internasional (Medco Energi) has formally agreed to take over a controlling stake in the local arm of global mining giant Newmont Mining Corp., in a deal worth US$2.6 billion.

On Thursday, Medco Energi announced it would acquire PT Amman Mineral Internasional (AMI), which owns an 82.2 percent stake in Newmont Nusa Tenggara (NNT), operator of the country’s second-largest copper and gold mine. AMI purchased its NTT shares from Newmont Mining Corp. and Sumitomo Corporation.

The Medco Energi group joined forces with AP Investment to acquire AMI’s shares with the support of three state-owned banks — Bank Mandiri, Bank Negara Indonesia (BNI) and Bank Rayat Indonesia (BRI).

Medco Energi president director Hilmi Panigoro said the acquisition would strengthen the company’s position as a leading energy firm in Indonesia and demonstrate its commitment to national energy development.

“This transaction is immediately accretive for Medco Energi given NNT’s world scale operation,” he said in a press release obtained by The Jakarta Post.

The acquisition is now awaiting approval from the government and Medco Energi’s stakeholders.

Newmont decided to sell its local business following the country’s decision to ban raw ore shipments in January 2014 and to put a progressive tax on concentrates, a semi-processed ore that is shipped to smelters for processing into finished metal.

The policy is part of the government’s plan to add more value to the country’s mineral processing industries and push mining corporations to develop their own smelters.

Medco Energi founder Arifin Panigoro claimed in April that President Joko “Jokowi” Widodo had agreed to an Indonesian consortium buying the controlling stake in NNT. However, months went by without any news of the acquisition.

NNT currently holds a contract of work, signed in 1986, to operate the Batu Hijau mine in West Nusa Tenggara, the second-biggest copper and gold mine in Indonesia after Freeport McMoran’s Grasberg site.

Newmont was also supposed to have divested a 7 percent stake to the government in 2011. However, the process met some obstacles and was halted.

Separately, the government has confirmed that it is aware of Medco Energi’s plan to take over NNT.

“We have been informed [of the planned acquisition]. The next step for [Medco Energi] is to request the government’s approval for the acquisition,” Energy and Mineral Resources Ministry mineral and coal director general Bambang Gatot Ariyono told the Post.

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