GOVT TO FINISH CALCULATION OF NEWMONE DIVESTMENT

 By Andi Abdussalam

Jakarta, May 19 (ANTARA) - The government is resolved to finish calculating the value of PT Newmont Nusa Tenggra (NNT) assets this week so that an agreement can be reached with the giant mining firm on the price at which it is to acquire MNT shares this month.

        "The government team will calculate the value of the company's mineral reserves, assets and financial conditions. We will use the result of our calculation as a reference in negotiations with NNT," Director General for Mineral Resources, Coal and Geothermal Bambang Setiawan said here on Tuesday.

        NNT, which operates the Batu Hijau mine, Indonesia's second-largest copper mine located in Nusa Tenggara, is now under a divestment process of 31 percent of its shares where 3 percent must be offered to the government for 2006, and 7 percent for each year from 2007 though 2010.

        The government and NNT have reached an agreement for the divestment of 3 percent worth US$109 million of the company's share for 2006 with assets valued at US$3.63 billion, and 7 percent worth US$282 million for 2007 with assets accounting for US$4.03 billion.

        However both sides are still negotiating the divestment of 7 percent of NTT stake for 2008 and 2009 respectively. In order to determine the 7 percent divestment prices for 2008 and 2009, the government and the company have to agree the values of its assets.

        NNT has offered the government a seven percent divestment price of US$426 million for 2008 with assets worth US$6.09 billion, and a seven percent divestment price of US$348 million for 2009 with assets worth US$4.97 billion.

        The government team has met with NNT twice to discuss the divestment price of the mining firm. In the first meeting on April 24, 2009, NNT foreign stakeholders claimed the company had assets worth a total of US$4.97 billion in 2009.

        With assets worth US$4.97 billion, the price of seven percent of the stake in the divestment of the firm in 2009 would reach US$348 million. This figure still constituted a proposal by NNT.

        In the second meeting of the team on May 8, 2009, the government discussed the NNT's price proposal.

        However, mining observers said NNT's claim of its assets was overvalued. "The value of NNT assets is not that high," Pri Agung Rakhmanto who is executive director of ReforMiner Institute, said recently.

        He said that based on the annual report of NNT in 2008, the value of total assets of Newmont Mining Corporation (NMC) --the holding company of NNT-- was only US$15.839 billion. The value of NMC's assets in Indonesia, including that of NNT and PT Newmont Minahasa Raya (NMR), is about 17 percent (of the US$15.839 billion).

        "With that reference, the combined value of NNT and NMR's assets is only about US$2.693 billion," Rakhmanto said. International Arbitration

        Last year, NNT and the government went through an international arbitration procedure following a dispute on how to implement the divestment scheme.

        According to a 1986 contract, Newmont must gradually sell a total of 31 percent of its stake in NNT to the government or local parties it appoints by 2010. Of these stakes, 3 percent must be offered to the government in 2006, and 7 percent each year in 2007 through 2010.

        The government accused the company of breach of contract for failing to meet the March 3 deadline to divest a 10 percent stake, a charge denied by the company at the time.

        By the end of 2007, according to the contract, the foreign shareholders were supposed to have sold 10 percent of their stake in NTT, which they failed to do.

        The court ruled in favor of the Indonesian government. Under the decision of the international arbitration court, Newmont is required to sell 17 percent of its stake which was supposed to be carried out in the 2006-2008 period.

        In addition, Newmont will also sell 14 percent of its stake allocated for 2009 and 2010, bringing the total of shares Newmont has to sell to 31 percent.

        In order to implement the divestment, the government has set up a team in charge of calculating NNT's share values.

        The mandatory 17 percent consisted of shares for 2006, 2007 and 2008. The government and NNT have agreed divestment price of three percent stake in 2006 valued at US$109 million with assets worth US$3.63 billion and seven percent stake in 2007 worth US$282 million with assets accounting for US$4.03 billion.

        The government and NNT are still negotiating the divestment price of seven percent stake for 2008 and 2009.

        NNT has offered a price of the seven percent stake for 2008 at US$426 million with assets accounting for US$6.09 billion and seven percent at US$348 million for 2009 with assets worth US$4.97 billion.

        The government recently indicated it wanted that NNT should put one value on its assets for 2008 and 2009 to show up real value of its shares.

        Bambang Setiawan, said that based on a single value for Newmont assets, the government could move forward to assess a real price of the NNT shares.

        "Newmont gives us different values for NNT's assets in 2008 and in 2009. We want them to come up with a single value, meaning one value for 2008 and 2009 assets," Bambang Setiawan said.***2*** (T.A014/A/HAJM/19:45/a014 ) (T.A014/A/A014/A/A014) 19-05-2009 20:39:11