ASEAN KEY DESTINATIONS
Local investment firm to buy Newmont’s Indonesia shares
Three local governments in Indonesia plan to set up an investment firm and seek outside funding so they can buy shares in a unit of Newmont Mining Corp, Reuters quoted a mining official as saying Tuesday.
The investment plans follows a prolonged dispute over PT Newmont Nusa Tenggara, which operates the Batu Hijau copper and gold mine in Sumbawa island, eastern Indonesia.
In late March, an arbitration court ordered the foreign owners of PT Newmont Nusa Tenggara to sell a 17 percent stake to the Indonesian government within six months, of which a 10 percent stake should go to the local governments.[ID:nJAK503192]
The governments of West Nusa Tenggara province, West Sumbawa regency and Sumbawa regency, the three areas where the mine is located, are now setting up a company and will invite investors to finance their purchase of the shares, said Heryadi Rachmat, the head of West Nusa Tenggara provincial mining office.
"Interested investors will do a presentation about their offer. We plan to hold it in July after we finish setting up the company," Rachmat told Reuters by telephone.
"We are reviewing some options on how to work with investors," he said. Rachmat did not give details but said two investing firms had made presentations to the regional governments.
Under the terms of the contract, foreign investors in PT Newmont Nusa Tenggara must sell 51 percent of the shares in the unit to local investors.
PT Pukuafu Indah, an Indonesian mining group, previously bought 20 percent of the unit, while Newmont and Japan's Sumitomo Corp own 45 percent and 35 percent respectively.
The foreign owners began offering NNT shares for sale in 2006, initially offering a 3 percent stake for $109 million. The following year they offered a 7 percent stake worth $282 million, and another 7 percent stake worth $426 million in 2008.
A resolution of the case is seen by analysts as crucial for Indonesia's plans to attract foreign investment into sectors such as mining to drive economic growth and create jobs.
But following the arbitration court's ruling, the two sides have failed to reach an agreement on a valuation for the unit.
Newmont has valued the whole of NNT at $4.9 billion and has started negotiations with the government over the price. The government said it planned to use an independent appraiser to value the unit.
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