Southern Arc Minerals Inc V.SA.H

The facts on the Newmont case69Rqc

[Kutubu]

Letter to the Editor: The facts on the Newmont case

Tue, 04/14/2009 2:55 PM  |  Opinion

There has been a great deal of misinformation published in the press about the Arbitration case of the government against PT. Newmont Nusa Tenggara ("Newmont") over the past week.

As counsel for the government, we would like to put the record straight on some matters once and for all. First of all, it is inaccurate to say that the government and Newmont "agreed to bring their dispute to the arbitration court in Geneva..." After three years of Newmont's delays, excuses and prevarications and after many warnings by the government, the government brought arbitration against Newmont in accordance with the terms of the Contract of Work between the parties covering the project in West Sumbawa.

The arbitration was held in Jakarta, not in Geneva, also as agreed in the Contract of Work. And the panel consisted of a Singaporean, an American and a Swiss Chair.

Second, the Arbitral Tribunal found Newmont to be in default in failing to make any valid offer to divest in 2006, 2007 and 2008, and recognized the government's right to terminate the contract as a result of such defaults. However, the Tribunal gave Newmont 180 days to cure the defaults before the government should exercise its rights. Cure means that the Newmont and Sumitomo parent companies must transfer 17 percent of the shares of the project company, PT. Newmont Nusa Tenggara to the government, or such entity as the government nominates, free and clear of any encumbrance whatsoever. An additional 7 percent has to be similarly transferred, free and clear, this year and a final 7 percent in 2010.

A third error that has been reported, although not by the Post, is that there was a dispute over the price of the shares. This is completely inaccurate. The price for the 2006 and 2007 divestment had been agreed upon and was never in issue.

The prices for the 2008 and 2009 obligations have not yet been discussed or negotiated, and these certainly will have to reflect the current economic conditions and their effect upon the value of the company.

Finally, the Tribunal also ordered Newrnont to reimburse a substantial portion of the government's Legal and other costs in pursuing its rights against Newmont in the arbitration.

Iswahjudi A. Karim
and Karen Mills
KarimSyah Law Firm
Jakarta