• Medco founder aims to build smelter for future production
  • Newmont says no discussions so far meet its sale criteria

An Indonesian businessman aims to buy a controlling stake in Newmont Mining Corp.’s copper mine in the country, a government minister said.

Arifin Panigoro, the founder of Indonesian oil company PT Medco Energi Internasional, plans to acquire 76 percent of PT Newmont Nusa Tenggara for an estimated $2.2 billion, Rizal Ramli, a coordinating minister for mining, told a televised press conference after meeting the businessman. Panigoro aims to build a smelter to handle future production, the Jakarta Globe newspaper quoted him as saying. Ramli and Panigoro did not respond to text messages seeking comment.

Newmont until now hasn’t had discussions on asset purchases that meet its criteria, Omar Jabara, a company spokesman, said on Thursday. Sumitomo Corp, which also owns a stake and jointly operates the mine, is considering replacement of its assets in general, but no decision has been made, a spokesman said. Medco, whose shares rose 12 percent on Thursday, declined to comment.

Newmont has come under pressure from the Indonesian government this year to build a smelter to process copper concentrate in the country, in exchange for allowing it to continue exporting following a ban on raw mineral ore shipments last year. It has promised to build the smelter together with Freeport-McMoRan Inc., and had its export permit renewed this week.

The Batu Hijau mine on Indonesia’s Sumbawa island also produces gold and silver, with other investors including a partnership of local authorities. Newmont has already divested a majority share, with Freeport still needing to sell a 20 percent stake in its Papua mine.

Indonesia, Southeast Asia’s largest economy, has curbed ore exports in an effort to encourage construction of domestic smelters, and requires foreign mine owners to divest majority ownership. Newmont had said the ore ban policy violated its so-called contract of work, an investment accord with the government, and a bilateral investment treaty between Indonesia and the Netherlands. It withdrew an international arbitration claim against Indonesia over the issue in August in an effort to get exports restarted.

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