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NEWS UPDATES Asean Affairs   21  December 2010

Indonesia bids for disputed mining shares

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The long-running saga over Newmont Nusa Tenggara's share divestment took its latest turn, one that may see the government buy a stake at well below market price.

US giant Newmont Mining's Newmont Indonesia, Sumitomo's Nusa Tenggara Mining and foreign shareholders on Monday revealed they had received an offer from the Finance Ministry to buy a 7 percent share of NNT for $271.6 million.

Bambang Setiawan, director general of mineral, coal and geothermal at the Energy Ministry, said the government was offering $271.6 million, well below NNT's $444 million asking price.

"Everyone is trying to get a slice of the share. It shows that it will be very useful," he said.

As part of a 1986 agreement, NNT was required to offer a 3 percent stake to the central government or its agencies in 2006, and 7 percent in each year from 2007 to 2010.

A South Jakarta District Court ruled in November that local shareholder Pukuafu Indah was entitled to 31 percent of the divested shares.

The ruling puts the status of the divestment in question as NNT had sold 24 percent of the shares to Multi Daerah Bersaing, a Bakrie-backed consortium of three local administrations in West Nusa Tenggara, for $884 million last year.

MDB said in May that it would be willing to buy the remaining 7 percent for as much as $400 million, but no offer has so far been made.

Newmont Indonesia and Nusa Tenggara Mining appealed to the Supreme Court shortly after the district court ruling was announced, saying the divestment had followed the procedures stated in the working contract.

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