JAKARTA, April 29 (Reuters) - The Indonesian government is likely to buy stakes in a local unit of Newmont Mining Corp. (NEM.N), either directly or through state firms, the state enterprises minister Sofyan Djalil said on Wednesday.
An arbitration court earlier this month ordered the foreign owners of PT Newmont Nusa Tenggara (NNT), which operates the Batu Hijau copper and gold mine in Sumbawa, to sell part of their stake to the government within six months after a long-running dispute. [ID:nJAK503192]
However, at the time it was unclear whether the government or the state-owned mining firms had the funds to buy the 17 percent stake, which was valued by Newmont at around $800 million.
“The government will buy the stakes whether it is done through the state enterprises or not. The important thing is the government will buy the stakes,” Djalil told reporters.
A legal adviser to the government said that it was possible for the government to purchase the stake.
“The funds do not have to come from the state treasury. The government can get financing,” said the adviser, who declined to be identified by name.
“Even in this economic crisis, there’s a lot of financing institutions that were, and certainly most of them still are, quite eager to finance the purchase,” the adviser said.
Based on the contract of work, the government would have the right to a seat on the board of directors of the Newmont unit once it owns the shares, the adviser said.
Newmont has valued the whole unit at $4.9 billion and has started negotiations with the government over the price of its stake in PT Newmont Nusa Tenggara.
“That’s Newmont’s valuation on the shares but we will calculate it again,” Bambang Gatot Ariyono, director of mining and coal enterprises at the energy and mines ministry.
Under the contract of works, foreign investors were required to sell 51 percent of the shares in the unit to local investors.
PT Pukuafu Indah, an Indonesian mining group, bought 20 percent. Newmont and Japan’s Sumitomo Corp (8053.T) own 45 percent and 35 percent respectively of the unit.
Indonesia has some of the world’s largest reserves of minerals and is keen to increase revenue from the mining sector. (Reporting by Fitri Wulandari and Sonya Angraini, editing by Sara Webb)