TORONTO (miningweekly.com) – US senior gold producer Newmont Mining expects that an arbitration committee will announce a decision during the first half of the year on the details of the firm's obligation to sell stakes in its Batu Hijau copper/gold mine, in Indonesia, to local investors.
Newmont took the matter to arbitration, after the Indonesian government accused the firm of failing to meet its commitment to sell a percentage of the local holding company of the mine by an agreed deadline.
The arbitration ruling will clarify “how and to whom” the interest in Batu Hijau should be divested, CEO Richard O'Brien said at an investor day in New York on Wednesday.
He commented that the uncertainty around the issue continued to weigh on Newmont's stock, but said he was optimistic that the divestiture question would soon be resolved, including whether Newmont may or should sell interests in Batu Hijau to private Indonesian companies or individuals, if local governments are not interested.
“We just want to make sure that it is a very visible process, so that when we are done we know that we are in compliance with the contract of work.”
Newmont owns 45% of PT Newmont Nusa Tenggara (PTNNT), which owns the Batu Hijau mine, and its partner, Nusa Tenggara Mining Corporation (NTMC) – owned by Japan's Sumitomo Corporation, owns 35%.
The balance is owned by an Indonesian company.
PTNNT entered into a Contract of Work with the government of the Republic of Indonesia on December 2, 1986, which covers the Batu Hijau mine, in which the partners agreed to sell a total of 51% in PTNNT to local entities in stages over an agreed timeframe.
The parties headed to arbitration last year, after the government threatened to cancel the mining contract for the operation, because it said the mine's owners were not holding up their end of the bargain.
Newmont's share of sales from Batu Hijau in 2008 totalled 135 000 oz of gold and 130-million pounds of copper.