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The government may back down on its earlier threat to
terminate its contract with PT Newmont Nusa Tenggara, as it wants to
wait for a team currently conducting a study on the issue.
Energy and Mineral Resources Minister Purnomo Yusgiantoro said
Wednesday the government would first wait for the results of a report
from the fact-finding team sent to investigate the stalled divestment
program, before making a decision on the contract.
"I will not be careless with this (and) according to the bureaucratic
norm, I need to report to my boss before making any decision.
"Therefore, the decision will be made at a Cabinet meeting," Purnomo
said at a hearing with the House of Representatives.
Purnomo added that the team might conduct the study until next week,
exceeding the government's deadline of Feb. 22.
Previously, the Directorate General of Geology and Mineral Resources
had given Newmont a default status for failing to divest 10 percent of
its stake by the end of 2007, as scheduled under the company's gradual
divestment program.
In its letter sent Feb. 11, the directorate general warned the company
to complete the divestment process within 11 days, or the office would
recommend its contract be terminated.
A director general at the ministry also said that the termination would
take immediate effect as of Feb. 22.
However, Purnomo said it was a difficult decision to implement, since
based its the contract of work, the company is allowed up to 180 days
to settle the divestment from the day it was given a warning.
Newmont insists it has followed all existing regulations and that the
delayed divestment was due to prolonged negotiations with the local
governments where the mines are located.
The company is now considering taking the dispute to an arbitration
tribunal.
Under the contract, when a dispute between a company and the government
is brought to arbitration, the government can not terminate the
contract before a verdict has been reached.
Under a 1986 contract, the company is required to divest a 3 percent of
its stake by the end of 2006 and a further 7 percent by the end of
2007, as part of its divestment program.
By the end of 2010, he company must finalize the sale of 51 percent of
its stake.
The House commission VII which oversees energy and mineral resources
had recommended the government be firm with Newmont.
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