Newmont's gold mine suspends its operation

JAKARTA (JP): Gold mining company PT Newmont Nusa Tenggara, controlled by U.S.-based Newmont Mining Corp., said it had suspended operations at its gold mine on Sumbawa island while it waited for a government permit.

Company president director Erik Hamer told AFP, in the West Nusa Tenggara provincial capital of Mataram, that his company was waiting for a permit to resume operations.

"If the permit is not issued soon, it will adversely affect this two-billion dollar project," Hamer said, adding that Newmont had been waiting for the permit for about six months.

He confirmed that the gold mine, said to have 14.7 million ounces in gold reserves, had been idle for about a week.

Newmont has a 45 percent share of the Batu Hijau gold mine in Sumbawa, West Nusa Tenggara, with Japan's Sumitomo controlling 35 percent and Indonesian company PT Pukuafu Indah, owned by businessman Jusuf Merukh, holding the remaining 20 percent.

Local papers reported last week that Newmont had asked the Indonesian government for construction permits but the government refused to give them until the company was ready to give greater shares to the Indonesian firms.

Director General for General Mining Adjat Sudradjat had confirmed that the government had asked Newmont to sell 45 percent of its shares to local companies, up from the current 20 percent.

The request to Newmont had been approved by the Minister of Mines and Energy I.B. Sudjana, he said.

Adjat said the proposal was made because the Indonesian people wanted a greater share in the country's mining projects and many Indonesian firms were capable of exploring and developing mineral deposits.

Several analysts said they regretted the government decision, calling on the government to adhere to the contract of work it gave the company.

They said the decision would taint the image of Indonesia in the mining world.

Merukh, who was speaking to reporters on the Busang affair yesterday, refused to comment. "Don't talk about that (Batu Hijau) at this time ... it is not the right time to talk about it," Merukh said.

Tycoon Muhammad (Bob) Hasan, who was involved in the Busang gold mine and before later withdrawing from the project, said he did not believe the government required Newmont to sell its shares.

"Nobody would invest if you did that," Bob Hasan said. (jsk)