Jakarta (ANTARA News) - International arbitrators have ruled in favour of Indonesia in a dispute with US giant Newmont Mining Corporation over the mandatory divestiture of shares, the mining minister said Wednesday.
Arbitrators have ruled that Newmont has 180 days from Tuesday to sell 17 percent of local unit PT Newmont Nusa Tenggara (PTNNT) or be found in default of its contract, Purnomo Yusgiantoro was quoted as saying by AFP from Dow Jones Newswires.
"The shares to be divested must be free and clear of pledge (agreements), and the source of the funds to be used to buy those shares is not PTNNT's business," Yusgiantoro said.
Yusgiantoro said 10 percent of PTNNT -- whose foreign shareholders are a joint partnership of Newmont and Japan's Sumitomo Corporation -- must be sold to local Indonesian governments while seven percent can be bought by a local
Newmont filed for arbitration in 2007 after missing a 2006 deadline under its Contract of Work (CoW) with the the Indonesian government to sell off three percent of of PTNNT, and a 2007 deadline to sell off another seven percent.
Newmont said it sought arbitration to avoid being found in default of its CoW after the government blocked attempts to sell of the shares in the local unit.
It then filed for further arbitration last year claiming the government was again blocking sales of the unit -- including a further seven percent scheduled for divestiture in 2008 -- claiming that a pledge agreement between Newmont and its senior lenders in PTNNT meant the shares could not be sold.
PTNNT operates the Batu Hijau gold and copper mine on Indonesia's eastern Sumbawa island.
Under Newmont's 1986 CoW with the Indonesian government, the company is required to sell 51 percent of PTNNT to local investors by 2010. A 27 percent stake in PTNNT has already been sold to private local firm PT Pukuafu Indah. (*)