The decision by an international arbitration unit based in Jakarta to order the US-based Newmont Mining Corp. to divest its holdings in the copper and gold-rich PT Newmont Nusa Tenggara mine is being watched closely by mining interests both domestically and internationally, because of allegations the politically powerful family of Aburizal Bakrie is involved.
Newmont became part in the concession in 1986 with Japanese investors including Sumitomo Corp., which controlled 35 percent, and Indonesian businesses which held the remainder. Batu Hijau, the nation’s second biggest copper mine, was valued at $4 billion in 2007.
Relations between both the national and state governments have been problematic with Newmont for years. In 2007, the Nusa Tenggara government threatened to shut the mine down if the contract to sell off part of the mining company wasn’t observed.
With Newmont having to divest to local governments, as per their contract, a memo surfaced in 2007 that indicated PT Bumi Resources Tbk, the Bakrie family controlled coal miner, was seeking to fund three local governments as part of their efforts to take a 31 percent stake in the mining venture.
The memo, discovered by Newmont, detailed a plan for a joint venture between West Nusa Tenggara and the Sumbawa and West Sumbawa provinces and Bumi. Later, Bumi representatives said the company interested in taking a stake in the venture.
On Wednesday, Dileep Srivastava, Bumi’s head of investor relations, continued to deny any corporate interest in the Newmont property.
Our position is the same as last year,” Dileep said. “We are not interested in buying the shares.”