After years of often fractious negotiations, the first 10 percent stake that US-based Newmont Mining is required to divest in its local subsidiary, PT Newmont Nusa Tenggara, was officially sold on Friday for $391 million to a consortium of local governments and a company affiliated with the Bakrie group.
The announcement of the sale marks what observers say is the first step in a gradual takeover of NNT by the politically connected Bakrie family.
Speaking at the signing of the contract at the Energy and Mineral Resources Ministry, Muhammad Zainul Majdi, the governor of West Nusa Tenggara, promised that the consortium would pay the full $391 million for the NNT stake before the deadline next Thursday. Newmont would then “pay back” $38 million to the province through corporate social responsibility programs, he said.
Bambang Setiawan, the ministry’s director general of coal and geothermal energy, said the money would be transferred back to the consortium within a year and would be spent on welfare programs.
The consortium, comprised of the governments of West Nusa Tenggara province and Sumbawa and West Sumbawa districts, joined Bakrie affiliate PT Multicapital to acquire the 10 percent stake, combining a 3 percent and a 7 percent tranche that were initially supposed to be divested in 2006 and 2007, respectively.
The grouping is also set to bid for another 14 percent stake that must be divested by the end of this year. It intends to eventually acquire 31 percent of NNT, which owns the mining rights to the lucrative Batu Hijau copper and gold mine in West Nusa Tenggara.
PT Aneka Tambang (Antam), representing the central government, is also likely to be involved in the bidding for the 14 percent stake, although the government this week decreed the process would be led by the local governments.
Sahala Lumban Gaol, the deputy for mining and strategic investment at the State Enterprises Ministry, said Antam could form a joint venture with other state mining companies to acquire a stake in Newmont.
“Antam could secure financing from other companies. As long as the lead bidder is the local governments, it will be fine,” Sahala said.
Meanwhile, Heriyadi Rachmat, head of the West Nusa Tenggara government’s mining agency, said a consortium involving Antam would not face any financing problems as Multicapital was prepared to provide the funding to acquire the “entire 31 percent” as part of the consortium.
Analysts had feared that giving the West Nusa Tenggara administrations control over the divestment process would see NNT’s resources fall into the hands of the Bakrie group and prevent local communities from benefiting from the stake sales. The majority of observers had wanted Antam to lead the consortium bidding for the 14 percent stake.
According to Newmont’s 1986 contract of work with the government, the company is required to sell a 51 percent stake in NNT to domestic entities before the end of March 2010.
Twenty percent was sold to local firm PT Pukuafu Indah in the early 1990s. The ongoing process for the divestment of the remaining stakes began in 2006.