JP/W. Sumbawa eyeing Newmont stake

Posted by: biznews

JP/W. Sumbawa eyeing Newmont stake - 04 Apr 07 13:58

W. Sumbawa eyeing Newmont stake

Ridwan Max Sijabat, The Jakarta Post, Jakarta

The local government of West Sumbawa regency, West Nusa Tenggara, along with a number of domestic firms, plans to gradually acquire up to a 31 percent stake in PT Newmont Nusa Tenggara (NNT), the regency's chief executive says.

West Sumbawa Regent Zulkifli Muhadli said Tuesday in Jakarta that the regency would take advantage of the company's mandatory share divestment in order to increase its stake in the copper and gold mining firm for the benefit of local people.

"Really, we have no financial difficulties as we have formed a consortium with domestic investors to acquire the shares to be sold by NNT as part of its divestment obligation," he said.

NNT, which operates its copper and gold mine at Batu Hijau, West Sumbawa, is controlled by the United States-based Newmont Corporation and Japan's Sumitomo Metal Mining Corp. Meanwhile, PT Pakuafu Indah, owned by Indonesian businessman Jusuf Merukh, has a 20 percent stake in the firm.

According to its current contract of work, Newmont and its principal partner are required to reduce their ownership in the operation to 49 percent after ten years of production.

This year, the company is supposed to divest 3 percent of its shares.

The mine has been in production since 1997, and all of its output is exported to Japan.

"Frankly speaking, West Sumbawa has a good right to acquire a part of NNT's shares as, besides the mine being located in the regency, it has contributed to the company's revenue. The firm also employs thousands of local people," he said, adding that NNT should be happy to see the local administration and domestic investors taking stakes as this would ensure the continuity and security of its operations.

Zulkifli said that West Sumbawa, together with PT Bumi Resources, PT Trakindo, Recapital Asia, Austindo (owned by George Tahija) and the Rajawali Corp (owned by Peter Sondakh), would buy the three percent of NNT shares to be divested this year.

The consortium would then buy seven percent annually until 2010.

"The purchase of three percent of NNT's shares at a price of US$109 million (Rp 1 trillion) will take place this month," he said, adding that overall NTT was worth as much as $3.6 billion.

The Batu Hijau mine is expected to produce between 210 and 230 million pounds of copper and between 230,000 and 250,000 ounces of gold this year.
Posted by: riccardo

Re: JP/W. Sumbawa eyeing Newmont stake - 11 Apr 07 12:11

A couple of weeks ago, I saw an article by Yosef Ardi that ties in with this... Essentially, what's going on is classic Indonesian business skulduggery. Bumi, owned by the Bakrie clan, which as most people remember undermined (pun intended) Rio Tinto and took it over in a way that was nothing short of criminal. Of course, the good nationalist judges and government people sided with Bakrie/Bumi.

Now Bumi is moving in on Newmont, whose American boss is awaiting a verdict in the big Buyat Bay fiasco. If found guilty, despite all the scientific proof of his innocence, Newmont is said to be pulling out of RI in total frustration.... Now this, of course, would be great for Bumi/Bakrie, making it easier and much cheaper to take control of Newmont. So the question now is, how much has Bakrie influenced the judges/courts despite the mountain of evidence that the case should never even have been taken to court?

Ah, Indonesian politics/business/justice. Some people say "it's so complex," when in fact it's really soooooo simple and childish. I think most international analysts and armchair pundits are unable to let themselves believe that 50-year-old men who are gov't or biz leaders can be so childish. These analysts naturally look at events through their own mature, educated lenses without even thinking that an RI minister or CEO would act like a 10-year-old schoolboy trying to cheat on an exam. BUT that is it, that is what they do and the only way to analyze this country is to try to remember our own thought processes when we were little evil, conniving versions of 10-year-old Dennis the Menaces.
Posted by: riccardo

Re: JP/W. Sumbawa eyeing Newmont stake - 11 Apr 07 12:17

Of course... this also means I'll be buying stock in Bumi if Ness (Newmont chief) is found guilty on April 24.