Satria Sambijantoro, The Jakarta Post, Jakarta | Business | Sat, July 13 2013, 4:12 PM
Finance Minister Chatib Basri has indicated he is no less bold than his predecessor Agus Martowardojo, time insisting the government should acquire shares in gold miner Newmont Nusa Tenggara despite politicians’ objections.
Chatib took the top job at the Finance Ministry in May after his predecessor Agus was transferred to Bank Indonesia (BI) by the President, reportedly because of altercations Agus had with members of the House of Representatives and politically wired businessmen over issues, including the acquisition of Newmont.
During his time as finance minister, Agus proposed to buy 7 percent in Newmont, a move that was rejected by lawmakers, who insisted the shares should be acquired by West Nusa Tenggara’s (NTB) local administration in a joint venture with Multicapital — a business unit of Bumi Resources, affiliated with Golkar Party chairman Aburizal Bakrie.
Many feared Chatib would not be as tough as Agus, but, much to surprise of the doubters, maintained the same strong stance as his predecessor.
“The central government is seriously considering to buy [shares in] Newmont and we will propose this to the House,” he told reporters in Jakarta on Friday.
Chatib refused to disclose the reasoning behind his insistence to invest in Newmont, saying that he “does not want to spark debate in the media”.
His statements, nevertheless, risk inciting Coordinating Economic Minister Hatta Rajasa, who is a known opposer of the plan.
Earlier this month, Hatta, who is a presidential candidate on a ticket from the National Mandate Party (PAN), said that he would offer Newmont’s shares to the local government.
“The central government has no budget allocation for the purchase,” he said as quoted by Reuters.
Replying to Hatta’s statements, Chatib said he was optimistic his plan would run smoothly.
“We do not need state budget because we have funds available in the PIP [State Investment Agency],” he said.
The government’s plan to buy Newmont shares was first unveiled in 2011, but it could not carry out the purchase due to a Constitutional Court ruling that effectively barred the transactions.
The court ruled against the government in a judicial review in which the latter south to overturn legal recommendations from the Supreme Audit Agency (BPK).
According to the audit body, the acquisition of the 7 percent stake for $246.8 million by State Investment Agency (PIP) required approval from the House, as it involved the permanent participation of the state funds.
US-based Newmont, which operates Batu Hijau mine in the island of Sumbawa, NTB, is required to sell 31 percent of its shares to local investors as part of its mandatory investment program. Twenty-four percent of the company’s shares have already been acquired by the local government in cooperation with Multicapital.
Batu Hijau’s reserves were estimated at 1.1 billion tons containing 0.525 percent copper and 0.37 grams of gold per ton, the mine life is set at 2023 at the current production rate.
Meanwhile, observers have expressed skepticism whether Chatib could lobby lawmakers to clear the path for Newmont’s acquisition, citing the possibility that his appointment might actually be a fruit of political deal struck by President Susilo Bambang Yudhoyono and Golkar’s Bakrie. “Chatib needs to prove that his ascent to power is not influenced by Bakrie’s factor,” Lin Che Wei, an analyst from the Independent Research Advisory Indonesia, wrote in a text message on Friday.