Friday, July 11, 2008
Government to Ask Newmont for Compensation for Failure to Divest
Source: Antara News

Jakarta (ANTARA News) - The Indonesian government will ask for compensation from PT Newmont Nusa Tenggara (NTT) for state revenue losses suffered due to the company’s failure to divest its shares since 2006, a spokesman said.

The government was still calculating the potential revenue losses, Simon Sembiring, director general of coal and geothermal affairs at the Energy and Mineral Resources Ministry, said here on Friday.

"We have asked to study the company’s financial reports since 2006 to enable us to calculate the country’s revenue loss potential," he said.

With the company making an annual profit of up to 10 percent, the government could estimate the state’s losses, he said.

Until now, NTT should have conducted divestment process of 10 percent, constituting three percent in 2006 and seven percent in 2007.

However, the divestment process had not yet been carried out and the issue was now a dispute being settled through an international arbitration court.

US mining giant Newmont Mining Corp. is holder of a 45 percent stake in PT Newmont Nusa Tenggara (NNT) mining company.

PT NNT was given a default status on Feb. 10 following its failure to sell a 10 percent stake to the Sumbawa and West Sumbawa district administrations, and West Nusa Tenggara provincial administration after initially failing to wrap up the deal by the end of 2007.

The divestment is required based on the 1986 contract of work for a gold and copper mine in Batu Hijau, West Nusa Tenggara.

PT NNT divestment obligation includes divestment of a 3-percent stake worth US$109 million in 2006 and a 7-percent stake worth US $282 million in 2007 and parties interested to buy the shares are West Sumbawa and Sumbawa district administrations and the West Nusa Tenggara provincial government.