• CEO says govt hasn't shown interest in exercising right to buy
  • Private investor group yet to lock down financing: Goldberg

A potential sale of Newmont Mining Corp.’s Indonesian assets to a group of private investors could include a stake that the government has so far snubbed, according to the biggest U.S. gold miner.

Newmont is working with partner Sumitomo Corp. to sell both companies’ entire stakes in PT Newmont Nusa Tenggara, Chief Executive Officer Gary Goldberg said in a telephone interview on Thursday. The unit owns Batu Hijau, the second biggest copper and gold mine in Indonesia.

Through a holding company, Newmont and Sumitomo together own 56 percent of the unit. The remaining 44 percent is owned by local entities. The government has had the right to buy 7 percent of Newmont and Sumitomo’s share since 2010, Goldberg said.

“They’ve shown no interest in acquiring it and haven’t figured out even when they could acquire it,” he said.

As a result, Newmont and Sumitomo are proceeding with efforts to sell their entire stake to investors, Goldberg said. He declined to identify the bidders but said they are yet to secure financing. Nor has Newmont secured the terms it wants for the assets, he said.

Indonesia banned raw ore shipments in January 2014 and put a progressive tax on concentrates, a semi-processed ore that’s shipped to smelters for processing into finished metal. The move is part of a wider policy to boost revenue by turning the country into a manufacturer of higher-value products and encourage construction of domestic smelters and refineries.

No Contact

In January, people with knowledge of the matter told Bloomberg that a consortium led by veteran investment banker Agus Projosasmito was preparing a $2 billion offer for control of Newmont’s Indonesian operations.

Earlier this month, Indonesian State-Owned Enterprises Minister Rini Soemarno told reporters in Jakarta that the government might acquire a stake by creating a mining holding company with Medco.

“For some reason, probably because of all the noise that we’ve seen in the press, it’s triggered some part of the government to say ‘hey, maybe we should do something’. But we’re not involved, we’ve had no contact directly and that’s a separate thing. The parties we’re dealing with are not those parties,” Goldberg said.

If Newmont and Sumitomo were able to get a deal for their full stake, the Indonesian government would still have to approve it, he said.

Asked if a deal is likely to be completed this year, Goldberg said: “I just don’t know.”

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