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Newmont clearing shares of Indonesian unit

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US mining giant Newmont Corp has taken steps to clear the shares of its local subsidiary PT Newmont Nusa Tenggara (PT NNT) from debt-related collateral obligations to meet the requirement for the divestment plan, the Jakarta Post quoted a spokesperson as saying.

"PT NNT has received approval from senior lenders that the 31 percent of shares on offer can be cleared of collateral obligations," Newmont spokesperson Rubi W. Purnomo said in a text message made available to the Jakarta Post on Thursday.

He added that with this approval PT NNT could move on with the divestment plan as required by the arbitration court in March.

In 1996, all PT NNT's stakes were put up as collateral for a US$1 billion loan to help finance the Batu Hijau mine, Indonesia's second largest copper mine.

The mine's stakes are owned by Newmont, Sumitomo Corp. and private Indonesian company PT Pukuafu Indah. Based on a 1986 contract, Newmont must gradually sell a total of 31 percent of its stake in NNT by 2010 to central or local government, or to state-owned enterprises (SOEs) designated by the government.

Of the stakes, 3 percent must be offered to the government in 2006, and 7 percent each year for 2007 through to 2010.

An arbitration panel made a judgement on March 31 reinforcing the contract, ruling that PT NNT must sell a 17 percent stake in NNT to the government, or to local parties it appoints, within 180 days. The verdict only covers PT NNT's divestiture obligation from 2006 to 2008.

"PT NNT now can divest the 2006, 2007, and 2008 shares within 180 days as stipulated," Rubi said.

Central government wants to buy a total of 14 percent of PT NNT's shares which was supposed to be divested in 2008 and 2009, subject to Newmont clearing the shares from the previous collateral obligations and finding the funds to buy them.

Finance Ministry secretary-general Mulia Nasution said Wednesday that the government was still in discussion on whether to invite state-run firms to get involved because the government did not have enough capital to buy the 31 percent of shares available, he added.

The government and Newmont are still in the process of negotiating the share prices for the divestment. The company has offered a price of US$426 million for the seven percent stake due for sale in 2008 and $384 million for the seven percent stake due to be sold in this year.

The goverment said it was evaluating the value of PT NNT's total assets to facilitate bargaining on share prices and expected price negotiations to be resumed by the end of this month.

Mulia said the government has capital in the Government Investment Center (PIP), but the amount available was far less than needed to buy the Newmont shares, hence the interest in involving the SOEs.


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