Regional Government Must Snap Up Newmont Stake: Lawmakers

By webadmin on 09:05 am Aug 02, 2012
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Jakarta/Mataram. National lawmakers called on the West Nusa Tenggara provincial government to buy the remaining 7 percent stake in Newmont Nusa Tenggara, a day after a Constitutional Court ruling blocked the central government from purchasing the shares in the miner.

Harry Azhar Azis, deputy chairman of House of Representatives Commission XI, which oversees financial affairs, said the court verdict would pave the way for the regional administration to buy the NNT stake. “There will be no more stumbling blocks now,” the Golkar Party politician said. “It is important for the regional government to buy the stake.”

Harry has called on President Susilo Bambang Yudhoyono to order Energy and Mineral Resources Minister Jero Wacik to handle the sale.

“The government has to instruct the regional government to buy the stake. The energy minister can ask it to prepare the beauty contest,” he said, referring to a process in which the interested parties assess the value of the stake.

On Tuesday, the Constitutional Court barred the central government from buying the stake when it ruled in favor of the House of Representatives.

The House first rejected the central government’s bid to buy the stake last year, and the central government had pushed the case all the way to Indonesia’s highest court.

NNT is the local unit of US mining giant Newmont Mining. It runs the country’s second-biggest copper and gold mine, on Sumbawa Island in West Nusa Tenggara province.

The 7 percent stake of NNT is valued at $246.8 million, the amount that the government and NNT agreed to in a deal last year.

Harry said that if the regional government owned a stake in NNT, it would create more value for the people of Indonesia than if the central government owned it. He did not elaborate.

Tri Budi Prayitno, a spokesman for the West Nusa Tenggara provincial government, said on Wednesday that his administration was waiting for a final response from the central government. “The governor of West Nusa Tenggara said we have to wait for the final stance from the Finance Minister before making any decision. We remain calm,” Prayitno said.

The court ruling, he added, suggested that the regional government would be allowed to team up with local companies to buy the stake.

West Nusa Tenggara Governor Muhammad Zainul Majdi and provincial lawmakers have been demanding since last year that they be allowed to buy the stake, but Finance Minister Agus Martowardojo has opposed their request.

Harry and other lawmakers opposed the central government’s bid last year for the 7 percent stake and called on the regional government to buy it instead.

That faction has argued that the regional government would reap greater value from the stake than the central government would.

“The local government can benefit more,” Harry said.

Marwan Batubara, executive director of the natural resources think tank Indonesian Resources Studies, questioned lawmakers’ motives.

“The House may argue that the regional government should get the share,” Marwan said. “If their motive is truly about procedure, they will agree to the [regional] government proposal, should the [regional] government come again to ask permission.

“If the House refuses such a proposal, then we know that they are practicing hukum rimba [mob rule] and disregarding the national interest.”

Harry also demanded that the finance minister resign in accordance with a vow the minister made last year that he would step down if the government weren’t allowed to purchase the stake.

“His promise to resign has yet to materialize,” Harry said.

“If he doesn’t keep his promise, it will cast a bad image on his credibility. If his credibility is in question, the credibility of the existing Cabinet is in question as well. So, Finance Minister Agus Martowardojo has to step down.”

Julian Aldrin Pasha, a spokesman for the president, said the government would abide by the court’s ruling, which is final and binding.

Julian also dismissed speculation that Agus would resign.

“There are no talks between the president and the finance minister on resignation,” Julian said after Agus was summoned by Yudhoyono on Wednesday. “The president did not touch that problem.”

An agreement made in 1986 required NNT to offer the central government or its agencies a 3 percent stake in 2006, and 7 percent more each year from 2007 to 2010.

Local rules mandate that 10 years after the start of production at a foreign-controlled mine, the foreign company must divest a 49 percent stake to the benefit of Indonesian companies.

NNT is 56 percent controlled by Nusa Tenggara Partnership BV, a consortium of Newmont Indonesia and Nusa Tenggara Mining. The rest is owned by Multi Daerah Bersaing (24 percent), Pukuafu Indah (17.8 percent) and Indonesia Masbaga Investama (2.2 percent).

Multi Daerah Bersaing is owned by the governments of West Nusa Tenggara province and Sumbawa and West Sumbawa districts, and by Multicapital, a unit of Bumi Resources Minerals. That company is controlled by the Bakrie Group.

Aburizal Bakrie, a senior member of the Bakrie family behind the Bakrie Group, is chairman of the Golkar Party. He intends to run for president in 2014. Harry did not respond to questions on whether his stance would favor Aburizal.

Multicapital teamed up with the three local administrations in 2009 to buy the 24 percent stake in NNT through MDB, a joint venture.

Officials from Bakrie Group were not available for comment.