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Govt Backs Off NNT Appraisal Plan
Reva Sasistiya | June 19, 2009

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The government has halted its plan to recruit an independent appraiser to value of a stake in US-based Newmont Mining’s West Nusa Tenggara subsidiary because the Finance Ministry has yet to give its approval.

Bambang Setiawan, the director general of coal, mineral and geothermal energy at the Energy Ministry, said the Finance Ministry had asked the negotiation team, which included officials from the two ministries, the Investment Coordinating Agency (BKPM) and the Development Finance Comptroller (BPKP) to extend negotiations until the end of June.

“The government believes there is still an opportunity to reach an agreement with Newmont without using an independent appraiser,” Bambang told reporters on Friday. “But if we fail to reach any agreement within two weeks then we will appoint an independent appraiser.”

The appraisal was meant to resolve the seemingly intractable dispute with US-based Newmont Mining over divestment to the state of its shares in PT Newmont Nusa Tengarra (NNT), a local unit of the miner.

Purnomo Yusgiantoro, the energy and mineral resources minister, said last week that the negotiations between the government and Newmont on the price of the stake had stalled, with a gap of $500 million continuing to separate the two sides.

Newmont claims that the total value of all of NNT’s assets is $4.9 billion, already well below a 2008 valuation of $6.1 billion. The government was initially holding out for a price of less than $4 billion, but now appears to be adopting a more realistic stance by revising this upward.

The government had been pushing for a lower price, arguing that Newmont’s valuation should not take into account NNT’s non-producing concessions.

NNT has four preproduction sites in West Nusa Tenggara: Elang, North Lunyuk, Rinti and Teluk Panas.

According to an international arbitration panel’s ruling on March 31, Newmont must sell 17 percent of NNT — 3 percent for 2006, 7 percent for 2007 and another 7 percent for 2008 — to the government or its designee within 180 days.

Under Indonesian law, Newmont and Japan’s Sumitomo — another NNT stakeholder — are required to divest 51 percent of their shares by 2010. The two foreign firms have already sold a 20 percent stake to PT Pukuafu Indah.