Newmont refuses to give 10% stake to government

Newmont refuses to give 10% stake to government

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana has
confirmed that Newmont Mining Corp. of the United States refused
to give a 10-percent share of a gold mine operated by its
subsidiary to the Indonesian government.

Speaking before the monthly cabinet session on economic
affairs on Wednesday, Sudjana said: "They said they don't want to
(give the 10 percent)".

Sudjana said he had no problem with the refusal and considered
the case closed.

The government said earlier this month that it had asked for a
10-percent share in the Batu Hijau gold mine in West Nusa
Tenggara. The mine is controlled by PT Newmont Nusa Tenggara, a
subsidiary of Newmont Mining Corp. of the United States.

The government said the request was made because the
Indonesian people had put increasing pressure on it to take
larger stakes in mining contracts.

According to earlier reports, private local firms also have
expressed interest in the Batu Hijau mine. They include the
Barito Pacific group, controlled by businessman Prayogo Pangestu,
and the Citra group, controlled by President Soeharto's eldest
daughter, Mrs. Siti Hardiyanti Rukmana.

Sudjana had said Tuesday that Newmont had the right to reject
the request and stick to the terms of its contract of work which
it received in 1986.

Newmont is currently preparing to construct mining facilities
and start commercial production at the mine which is estimated to
hold 14.7 million ounces of gold and 5.3 million tons of copper.

It has been waiting for a government permit to start building
the US$2-billion facilities for more than six months now.

The contract is 45 percent owned by Newmont Nusa Tenggara, 35
percent by Sumitomo Corp. of Japan and 20 percent by PT Pukuafu
Indah, which is controlled by local businessman Yusuf Merukh.

Reuters reported Wednesday that Newmont Nusa Tenggara
President Eric Hamer had rejected the government's bid to secure
a 10-percent stake in its Batu Hijau copper and gold project.

"It is not feasible. We are already carrying a 20-percent
(local) partner... the project will not carry another", Hamer was
quoted as saying.

"It is economics. It is a very tight project," he said.
"Anyway, I need to talk to the (mines) minister myself and Adjat
Sudradjat (the director general of mining)."

Hamer said he had heard from official sources that the
government was about to grant Newmont Nusa Tenggara permission to
begin constructing the mine at Batu Hijau.

"We have heard they will do so," he said. "But I won't believe
it until I see it in my hand."

Sudjana said Tuesday that the government was planning to make
it compulsory for the holders of future mining contracts of work
-- outside the oil and natural gas sector -- to give the
government at least 10-percent equity in their mines.

"We have asked (Newmont) to understand the people's needs
because they have operated here for more than 30 years," he old a
news conference on Tuesday.

The government's request for a stake in the Batu Hijau mine
had caused a controversy and had come under sharp criticisms by
analysts and former mining officials because it was made long
after the investors and the government had signed the contract of
work.

The government's move also raised many eyebrows as it was
revealed amid the announcement of the stunning report from
independent consultants Strathcona Mineral Services Ltd. on
Sunday that the huge gold find claimed by Bre-X Minerals Ltd. at
Busang in East Kalimantan turned out to have no economic value.

Sudjana said Wednesday that operations at the Busang mine
would be placed under the control of state-owned general mining
company PT Aneka Tambang.

"We have ordered Aneka Tambang to safeguard the Busang
property. After all, it belongs to us," he said. (pwn)

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