West Sumbawa District Wants Stake in Newmont Mining Unit

Fitri

Mataram. The district head of West Sumbawa expects the central government to give priority to the district in its attempt to acquire a 7 percent stake in Newmont Nusa Tenggara, the local unit of US mining giant Newmont Mining.

“The West Sumbawa district, where the mining is located, should be given priority” to buy the stake, Zulkifli Muhadli, district head of West Sumbawa, told the Jakarta Globe on Wednesday.

Zulkifli’s comment was the first response by the regional government after the central government was blocked from buying the 7 percent stake in NNT last month. NNT runs the country’s second-biggest copper and gold mine on Sumbawa island in West Nusa Tenggara (NTB) province. Under Newmont’s contract of work, the gold and copper miner is required to divest 51 percent of its stake in several stages.

Zulkifli said that area residents demanded the district be given priority to buy the stake.

“The people think, that as a producing district, West Sumbawa is entitled to priority,” Zulkifli said.

The district is the one that must deal with the attendant environmental damage that comes with mining operations, he said.

He added that the district would be forced to outlay funds for repair and rehabilitation of the local environment.

“We, therefore, strongly hope that we are given the priority,” he said. If the people of West Sumbawa failed to buy the stake, they would ask the provincial and district administrations to jointly purchase it, Zulkifli added, without disclosing the source of financing for the acquisition.

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

The Constitutional Court banned the central government from buying the stake last month. The court instead asked the government to seek approval from the House of Representatives.

A 1986 agreement required NNT — which at the time owned 100 percent of the mine — to offer the central government or its agencies a 3 percent stake in 2006 and 7 percent more each year from 2007 to 2010.

Regulations had mandated that 10 years after the start of production from a foreign-controlled mine, the foreign company must divest a 49 percent stake to the benefit of Indonesian companies.

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

Tribudi Prayitno, a spokesman for the NTB administration, said the ideal situation would see the Sumbawa and West Sumbawa district governments joining funds with the province in a joint bid for the 7 percent stake.

“The commitment is for us to remain solid and make a joint bid for the 7 percent stake,” Tribudi said.

Ruslan Turmuji, a lawmaker from the Indonesian Democratic Party for Struggle (PDI-P), said that the local governments should jointly bid for the stake in NNT.