The Indonesian government said Wednesday that it had "won" an arbitration case against a local unit of Newmont Mining Corp., (NEM) after arbitrators ruled Newmont must divest 17% of the unit within 180 days from Tuesday.

The government also said it can revoke Newmont's operating licence should the company fail to meet the deadline to divest the stake in PT Newmont Nusa Tenggara, or PTNNT.

Tuesday, people familiar with the matter had said that the three international arbitrators overseeing the case had said the government could not revoke Newmont's operating licence, known as a Contract of Work.

However the statement from the government said it "has the right" to revoke the contract should Newmont fail to meet the divestiture deadline.

The people familiar with the matter on Tuesday also said that Newmont had to sell 10% of PTNNT.

"The government of Indonesian has won against the foreign company," Minister for Energy and Mineral Resources Yusgiantoro Purnomo said in the statement.

"This sets a positive precedent for the government to continue to take strong action against foreign companies that do not fulfill their responsibilities but simply abuse their privileges. It also proves that (Newmont) was wrong and must improve its conduct if it wishes to continue operating in Indonesia," he added.

-By Reuben Carder and I Made Sentana, Dow Jones Newswires; 62 21 3983 1277; Reuben.Carder@dowjones.com; I-Made.Sentana@dowjones.com