Indonesia govt defends its purchase of 7pct stake in Newmont
Despite criticism from the House of Representatives, the finance ministry insisted that the central government’s decision to acquire a 7 percent stake in PT Newmont Nusa Tenggara (NNT) would have greater benefits for the country and people living near the mining areas.
The ministry’s director general for state assets, Hadiyanto, said on Wednesday that the 7 percent stake gave the central government more supervision authority of the company’s activities to ensure its compliance with government regulations.
“By owning the stake, we can participate in overseeing how the company operates its mining activities, formulates corporate social responsibility programmes and pays taxes and royalties,” he told a seminar held by the West Nusa Tenggara Student Union (Persma NTB).
He expected that with the central government’s involvement in the company’s management, the multiplier-effects of the company’s presence in the province and the West Sumbawa regency would be more noticeable.
NNT operates the Batu Hijau gold and copper mine in West Nusa Tenggara. In May, the central government, through the state investment agency (PIP), purchased the final 7 percent stake that had to be divested in a $246.8 million transaction.
Under a mining contract signed in 1986, the company’s foreign shareholders, American mining giant Newmont and Sumitomo of Japan, had to divest 51 percent of their shares to local investors after five years of commercial operation.
However, they are required only to divest 31 percent because the 20 percent of the shares are already held by local companies.
To comply with the divestment obligation, Newmont and Sumitomo sold 24 percent of their ownership to Multi Daerah Bersaing (MDB), a joint venture between PT Multicapital, a business unit of coal giant PT Bumi Resources, and the local administrations. The central government bought the remaining
7 percent.
With the government’s acquisition, NNT’s foreign shareholders are reduced to a 49 percent stake, with MDB holding 24 percent, PT Pukuafu Indah 17.8 percent, the PIP 7 percent and PT Indonesia Masbaga Investama 2.2 percent.
House Commission XI overseeing financial affairs blasted the decision, saying the PIP should focus on infrastructure development rather than mining.
The commission then suggested that the Supreme Audit Agency (BPK) audit the PIP’s purchase. Finance minister Agus Martowardojo told the commission he would resign if the BPK found anything unlawful in the transaction.
Currently, local administrations were still insisting that the 7 percent stake be given to them.
The former chief of the finance ministry’s fiscal office, Anggito Abimanyu, suggested that the central government and local administrations sit down and discuss how the local governments could benefit from the stake.
“If the stake is bought by MDB, Multicapital will get the most benefit since it owns a 75 percent stake in MDB,” he told the discussion.
Manimbang Kahariady, former chair of the West Sumbawa Regional Representatives Council (DPRD), said the people in the regency did not really benefit from the local administrations’ ownership
in NNT.
“We hope that after taking over the 7 percent stake, the finance ministry doesn’t forget to allocate more funds for infrastructure development in our regency,” he said.
http://www.thejakartapost.com/news/2011/06/03/central-govt-defends-its-purchase-7-stake-newmont.html
Category: ResourceAsia
