Indonesia govt, Newmont in talks on divestment
Indonesia government has started talks with US mining giant Newmont Corp over the price of the shares its Indonesian subsidiary is divesting, reported the Jakarta Post.
Bambang Setiawan, the director general for coal, minerals and geothermal at the energy and mineral resources ministry, had a closed meeting Friday with Martinono Hadianto, president director of PT Newmont Pacific Nusantara, the holding company for Newmont's Indonesian operations, at his office.
"This time we only listen for the clarification about the prices from Newmont. Basically, they still offer the same prices as the company did previously," Bambang told reporters.
Newmont owns a 45 percent stake in PT Newmont Nusa Tenggara (NNT), operator of Indonesia's second largest copper mine Batu Hijau. Sumitomo Corp. owns 35 percent and PT Pukuafu Indah, a private Indonesian company holds the remaining 20 percent.
According to a 1986 contract, Newmont must gradually sell a total of 31 percent of its stake in NNT to the government or local parties it appoints by 2010. Of these stakes, 3 percent must be offered to the government in 2006, and 7 percent each year in 2007 through 2010.
An arbitration panel reinforced this contract on March 31, stipulating that Newmont has to sell a 17 percent stake in NNT - which covers the divestment in 2006, 2007 and 2008 - to the government, or parties it appoints, within 180 days.
The divested stakes in 2006 and 2007 are supposed to be sold to the regional government, while the central government aims to buy the 2008 and 2009 stakes.
Newmont has offered the price of US$109 million for the 3 percent stake it was supposed to sell in 2006; $282 million for the 7 percent stake due to be sold in 2007; and $426 million for the seven percent stake due for sale in 2008.
Newmont has also announced its price ($384 million) for the 7 percent stake due to be sold in this current year.
Bambang said Newmont was still sticking to these previously announced figures in the Friday meeting. He said the government would be appraising the current value of Newmont assets, so providing the basis for the calculation of the prices of the stakes to be divested.
"We will use our data to bargain for the value of Newmont assets from which the prices for the divestment are calculated," he said.
During the meeting, Bambang said Newmont presented figures arguing that the total value of PT NNT's assets amounted to about $4.9 billion. He said the government would bargain for a lower value. Bambang said the government and Newmont would have a weekly meeting to continue these price negotiations, until agreement.
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