Indonesia Group Said to Seek Funds for Newmont Mine Takeover

  • Majority stake in Newmont operations to fetch up to $3 billion
  • Veteran banker Projosasmito, Barki family preparing bid

An Indonesian consortium, led by veteran investment banker Agus Projosasmito, is seeking funding for a potential bid for control of Newmont Mining Corp.’s copper operations in the country, people with knowledge of the matter said.

The bidding group has approached banks about financing an offer for a majority stake in local operating company PT Newmont Nusa Tenggara, which could fetch as much as $3 billion, according to the people, who asked not to be identified as the information is private. The consortium also includes the family of Kiki Barki, who started thermal coal producer PT Harum Energy, and Arifin Panigoro, the founder of energy-focused Medco Group, the people said.

Projosasmito’s group could finance its bid with a combination of equity, debt and mezzanine financing, according to the people. The consortium plans to make an offer for the controlling stake in Newmont Nusa Tenggara in the first half of the year, the people said.

Newmont Nusa Tenggara owns Batu Hijau, the second-biggest copper and gold mine in Indonesia after Freeport-McMoRan Inc.’s Grasberg asset, which has the world’s biggest gold reserves. The open-pit Newmont mine, whose name means “green rock” in Bahasa Indonesia, was discovered in 1990 in the southwest region of Sumbawa island.

Market Experience

Rizal Ramli, a coordinating minister overseeing mining in Indonesia, said in November that Panigoro plans to buy 76 percent of Newmont Nusa Tenggara for an estimated $2.2 billion, without providing further details. Newmont Mining said the same day that no discussions to buy its assets met its criteria.

Newmont Mining owned 31.5 percent of Newmont Nusa Tenggara at the end of September last year, according to its latest quarterly report. Japanese trading house Sumitomo Corp. and Indonesian investors also hold stakes, the report shows.

Projosasmito has more than 30 years’ experience in the Indonesian capital markets, including stints as president director of local brokerage PT Danareksa Sekuritas and president commissioner of Jakarta-based PT Nusantara Capital Securities, according to a biography on Nusantara’s website. He is now the founder and chief executive officer of coal miner PT Ithaca Resources.

Mine Life

A receptionist at Ithaca’s Jakarta headquarters said Projosasmito wasn’t in the office, and a person who answered the phone at Barki’s office said he wasn’t available. Panigoro didn’t respond to phone calls seeking comment.

While Newmont is open to “serious expressions” of interest in Newmont Nusa Tenggara, “there have not been any that include fully committed funding,” Newmont Mining spokesman Omar Jabara said in an e-mailed statement. “In the meantime, we remain focused on operating Batu Hijau safely and efficiently.”

A representative for Sumitomo declined to comment.

Newmont recorded $473 million of sales from its Indonesian mining operations in the quarter ended Sept. 30, accounting for 23.3 percent of total revenue, data compiled by Bloomberg show. The Batu Hijau mine is expected to continue production until 2023 at current rates, according to the website of the Newmont affiliate.

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