Govt proves sale KPC shares<\/p>\n
Fitri Wulandari, The Jakarta Post, Jakarta<\/p>\n
The government plans to summon coal mining company Rio Tinto
\nand energy giant BP Plc to explain the \"sudden\" sale of their
\nentire stakes in Indonesia's second largest coal miner, PT Kaltim
\nPrima Coal (KPC).<\/p>\n
\"We will summon Rio Tinto and BP to explain why they suddenly
\ndecided to sell their stakes in KPC,\" Laksamana Sukardi, State
\nMinister for State Enterprises, told reporters on Tuesday.<\/p>\n
He did not provide details on when the meeting would take
\nplace.<\/p>\n
Anglo-Australian firm Rio Tinto and Anglo-American firm BP
\nPlc, which owned equal stakes in KPC, said on Monday that they
\nhad agreed to sell all their shares to local coal mining company
\nPT Bumi Resources for US$500 million.<\/p>\n
This marks the end of the protected legal battle between the
\ntwo companies and the East Kalimantan provincial administration,
\nwithin whose jurisdiction the mine is located, over who will
\ncontrol the mining firm.<\/p>\n
KPC operates a coal mine in Sangatta in East Kalimantan,
\nproducing some 16 million tons of steam coal annually. The coal
\nis exported to the Asia-Pacific region, Europe and the U.S..<\/p>\n
The decision to sell out sent shockwaves through the mining
\nindustry, which has received no new investment for the last five
\nyears due to the economic crisis and unfavorable business
\nclimate.<\/p>\n
Djoko Darmono, the secretary-general of the Ministry of Energy
\nand Mineral Resources, said that the divestment process involving
\n51 percent of KPC shares would proceed despite the change in
\nshareholders.<\/p>\n
\"Despite the change in KPC's shareholders, the policy for the
\ndivestment of a 51 percent stake will be carried out as planned,\"
\nDarmono said as quoted by Antara.<\/p>\n
Under its 30-year contract, KPC was supposed to hand over the
\n51 percent stake, which is worth $453 million, by the end of
\n2001. But the divestment process has been tied up in knots for
\nyears due to a legal battle with the East Kalimantan provincial
\nadministration, which wants to get its hands on the stake.<\/p>\n
Last year, the government decided that a 31 percent stake
\nwould be sold to the East Kalimantan government, and 20 percent
\nto state-owned coal miner PT Tambang Batubara Bukit Asam.<\/p>\n
Rio Tinto and BP stressed that their decisions were based
\npurely on business considerations.<\/p>\n
\"It is purely a business deal. And it is by far the best one
\navailable,\" Anang Rizkani Noor, Rio Tinto's deputy director for
\nexternal relations, told The Jakarta Post.<\/p>\n
Satya Widya Yudha, BP Indonesia vice president for government
\nand public affairs, was of the same opinion, saying that the
\ncompany took the view that coal mining was not BP's core
\nbusiness.<\/p>\n
\"We want to concentrate on oil and gas. This is a good
\nopportunity for us to release our shareholding in KPC,\" Satya
\nsaid as quoted by detikcom.<\/p>\n
Anang added that Bumi Resources had been selected as the
\ncompany had been the only one to show serious interest in buying
\nKPC, and had a wealth of expertise in the coal mining field.<\/p>\n
Questioned why the price for a 100 percent stake was lower
\nthan the agreed-upon price of $889 million, Anang only said the
\nprice was \"reasonable\".<\/p>\n
Early last year, the East Kalimantan provincial
\nadministration, the central government and KPC had agreed to
\nvalue 100 percent of KPC's shares at $889, and $453 million for a
\n51 percent share.<\/p>\n
P.L. Coutrier, the executive director of the Indonesian Mining
\nAssociation (IMA), said the decision was another sign that
\nforeign investors were pulling out of the country's mining
\nindustry.<\/p>\n
\"It is very unfortunate as it means we are going to face a
\nhuge opportunity loss from the industry,\" he told the Post.<\/p>\n
The lack of legal certainty caused by, among other things, the
\nabsence of a new mining law and continuous disputes with local
\ngovernments had contributed to the unfavorable situation in the
\nmining industry.<\/p>\n
The autonomy laws, which took affect in 2001, gave powers over
\nthe mining industry to local governments.<\/p>\n
Coutrier added that the current situation would slowly kill
\nthe mining industry.<\/p>",
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