Newmont Mining Corp. filed for arbitration in a dispute with Indonesia over the government’s demand that the U.S. company sell part of a mine in the Southeast Asian nation to local investors or lose its operating contract.
Newmont is “confident” it’s in compliance with the contract regarding the divestiture and is committed to resolving the issue, the Denver-based company said Monday in a statement. The Indonesian government also plans to go to arbitration, Energy and Mining Minister Purnomo Yusgian toro said in Jakarta on Monday.
A cancellation of Newmont’s contract to mine copper and gold at the Batu Hijau mine may undermine overseas investors’ confidence in the metals- rich country.
The mine will continue to operate normally during the court proceedings over the stake-sale dispute, an official said.
“Everybody is watching it,” said James Castle, president of CastleAsia, which advises overseas companies on investment opportunities in Indonesia. “Nobody likes to see a dispute between the regulator and a private company. That always gets people’s attention.”
The government’s decision to seek arbitration “triggered a requirement” for Newmont’s local unit to file for arbitration, said Rubi Purnomo, a spokesman for Newmont.
The moves came as a deadline expired for Newmont and other overseas investors to agree to sell a 10 percent stake in Batu Hijau to local investors. Indonesia has said Newmont hasn’t abided by its contract. Newmont disagrees.
Newmont owns 45 percent of PT Newmont Nusa Tenggara, which operates Batu Hijau, the nation’s second-largest copper mine. Japanese investors including Sumitomo Corp. control 35 percent and Indonesian businesses hold the remainder.
