Newmont Mining Corp., the largest U.S. gold producer, must sell a 17 percent stake in its Indonesian copper mine within six months to the government, an international arbitration panel ruled.
The Denver-based company said today in a statement it will outline a path forward to sell the holding in PT Newmont Nusa Tenggara to the Indonesian government.
The ruling by the Geneva-based court also said Indonesia can't terminate its mining contract with Newmont. No price or timing was given in the statement. The decision stems from a 2008 dispute between Newmont and Indonesia about cutting foreign shareholdings in the nation's mines.
The two parties signed a mining contract in 1986 that requires Newmont and other overseas investors to cut their combined stake in Newmont Nusa Tenggara to 49 percent by 2010.
Newmont now owns 45 percent of the unit, which operates Batu Hijau, Indonesia's second-largest copper mine.
Japanese investors including Sumitomo Corp. control 35 percent of Newmont Nusa Tenggara, and Indonesian businesses hold the remainder.
Newmont and the Indonesian government asked for arbitration last year after the U.S. company didn't meet divestiture requirements for the mine and was facing risk of losing its operating contract.
Under the 1986 contract, 3 percent of Newmont Nusa Tenggara was to be offered to the Indonesian government or its agencies in 2006, and 7 percent each year in 2007 through 2010. The ruling covers the stake offers from 2006 to 2008. Newmont yesterday offered a 7 percent stake in the Batu Hijau operation to Indonesia for $348 million.
Newmont said in February last year all shares in Newmont Nusa Tenggara had been pledged as collateral against $1 billion in loans to develop the Batu Hijau mine.
Wednesday, April 1, 2009
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