Indonesia regional govt wants bigger Newmont stake

JAKARTA, July 13 (Reuters) - Indonesia's West Nusa Tenggara province wants to buy more shares in a local unit of Newmont Mining Corp (NEM.N) after reaching a financing deal to purchase a 10 percent stake, the governor of the province said on Monday.

An arbitration court in late March ordered the foreign owners of PT Newmont Nusa Tenggara, which operates the Batu Hijau copper and gold mine in Sumbawa island, eastern Indonesia, to sell a part of their stake to local investors or the government within six months, after a long-running running dispute.

The governments of West Nusa Tenggara province, West Sumbawa regency and Sumbawa regency, the three areas where the mine is located, and financing firm Multicapital have agreed to form a joint venture company to negotiate a price with Newmont.

"The regional government has sent a letter to the president asking that the whole divestment stake (in Newmont) of 31 percent be given to the regional government," Muhammad Zainul Majdi, the governor of West Nusa Tenggara province told reporters.

Local media has reported Multicapital is a subsidiary of PT Bumi Resources (BUMI.JK), Indonesia's biggest coal miner and linked to the the family business of Indonesia's welfare minister Aburizal Bakrie. A Bumi spokesman declined to comment.

Majdi said the regional governments in West Nusa Tenggara may cooperate with Multicapital in buying more Newmont shares.

"We are making the maximum effort to get the rest of the shares, not only the 10 percent but until we reach 31 percent," Majdi said.

The foreign owners began offering NNT shares for sale in 2006, initially offering a 3 percent stake for $109 million. The following year they offered a 7 percent stake worth $282 million, and another 7 percent stake worth $426 million in 2008.

But following the arbitration court's ruling, the two sides have failed to reach an agreement on a valuation for the unit.

Newmont has valued the whole of NNT at $4.9 billion and has started negotiations with the government over the price. The government said it planned to use an independent appraiser to value the unit.

Mines and energy minister Purnomo Yusgiantoro said the government would decide by the end of this week on the price of shares in the Newmont unit.

Under the terms of the contract, foreign investors in PT NNT must sell 51 percent of the shares in the unit to local investors.

PT Pukuafu Indah, an Indonesian mining group, previously bought 20 percent of the unit, while Newmont and Japan's Sumitomo Corp (8053.T) own 45 percent and 35 percent respectively.

A resolution of the case is seen by analysts as crucial for Indonesia's plans to attract foreign investment into sectors such as mining to drive economic growth and create jobs.

(Reporting by Muklis Ali; Editing by Ed Davies)