Newmont Indonesia mulls IPO to meet divestment rule

JAKARTA, March 2 (Reuters) - U.S. mining group Newmont Mining Corp. (NEM.N: Quote, Profile, Research) is considering an initial public offering (IPO) as an option for its Indonesian unit to meet its divestiture requirements, Newmont's chief financial officer said on Sunday.

Under its contract of work, PT Newmont Nusa Tenggara which operates the Batu Hijau copper and gold mine in Sumbawa, eastern Indonesia, must sell 51 percent of its shares to local investors.

It has already sold a 20 percent stake to a local company, PT Pukuafu Indah, and has agreed to sell 31 percent gradually by 2010, although the government has threatened to annul the firm's contract after accusing it of not selling the shares fast enough.

"Time has come for us to look at other Indonesian companies that have interest in our shares, including an initial public offering, " said Russell Ball, Newmont's chief financial officer.

"We would like to see PT Newmont Nusa Tenggara listed in the stock exchange, like INCO. But getting there would take a lot of discussion," Ball told reporters, referring to nickel miner PT International Nickel Indonesia Tbk (INCO.JK: Quote, Profile, Research) which is listed on the Indonesia Stock Exchange.

Inco is owned by Brazil's Vale (VALE5.SA: Quote, Profile, Research)(RIO.N: Quote, Profile, Research).

Controversy over the sale was also sparked after a revelation this week that PT Bumi Resources Tbk (BUMI.JK: Quote, Profile, Research), a local coal firm controlled by the family of Indonesia's chief welfare minister Aburizal Bakrie, had agreed last year with three local governments in Indonesia to buy the 31 percent of Newmont's local unit.

Under a Memorandum of Understanding (MoU), the government of Sumbawa regency, Sumbawa Barat regency and the Nusa Tenggara Barat provincial government would buy the shares but turn them over to Bumi.

Ball said the new finding could hamper negotiations with the government because parts of Bumi's shares may not be owned by Indonesian investors.