KPC declares force majeure due to strike<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Coal mining company PT Kaltim Prima Coal (KPC) declared force
\nmajeure on overdue shipments to a number of its customers in
\nresponse to a worker strike that has entered its second week.<\/p>\n
\"After careful consideration, we regret that we have to
\ndeclare a force majeure to some of our customers,\" KPC president
\nNoke Kiroyan said in a press release on Tuesday that was received
\nby The Jakarta Post.<\/p>\n
But the company said it remained hopeful it would be able to
\nreach an agreement with workers to end the strike.<\/p>\n
KPC, which operates a coal mine in East Kalimantan, one of the
\ncountry's largest, has been forced to halt production since Aug.
\n29 due to a strike by employees. The striking employees are
\ndemanding a bonus from the company's current shareholders: Anglo-
\nAmerican energy company BP PLC and Anglo-Australian mining firm
\nRio Tinto.<\/p>\n
The strike began after BP and Rio Tinto, which jointly own
\nKPC, announced they were selling their entire stake in the
\ncompany to local mining company PT Bumi Resources for US$500
\nmillion, including $187 million worth of debt. The deal is
\nexpected to be completed by this October.<\/p>\n
A majority of the company's 2,700 employees are taking part in
\nthe action, as they demand 15 percent of the proceeds of the
\nsale. The shareholders have agreed to pay the workers a bonus,
\nbut they consider the amount demanded by the strikers to be
\nunreasonable.<\/p>\n
The strike is causing KPC losses of $500,000 daily.<\/p>\n
The government said earlier the strike could cost the state up
\nto $3 million in lost royalties if it continued for more than a
\nmonth. Under its contract, KPC has to pay 13.5 percent of the
\nproceeds from its output to the government.<\/p>\n
\"KPC management has continuously urged the employees to return
\nto work and allow the process of mediation to continue,\" Noke
\nsaid in the release.<\/p>\n
Besides the strike, KPC still faces a prolonged dispute with
\nthe local administration over the ownership of KPC's mining site
\nin Sangatta, East Kalimantan.<\/p>\n
Under the coal agreement signed by KPC in 1982, the company is
\nobliged to sell 51 percent of its shares to Indonesian
\nindividuals, companies or the government. The divestment was to
\nhave taken place 10 year after the company began production,
\nwhich was in 2001, but still has not occurred.<\/p>\n
The East Kalimantan administration has been eying shares in
\nthe company for years, and has been adamant that it should be
\ngiven the first opportunity to buy the KPC shares.<\/p>\n
Last year, the central government stepped in and ruled that a
\n20 percent stake would go to state coal mining firm PT Tambang
\nBatubara Bukit Asam, and the remaining 31 percent to the local
\ngovernments As part of this agreement, a 51 percent stake in the
\ncompany was valued at $820 million.<\/p>\n
In July, Rio Tinto and BP shocked observers by announcing they
\nwere selling the entire stake in KPC to Bumi for $500 million.<\/p>\n
Bumi has said it will negotiate with the local government and
\nhas promise to go ahead with the divestment process.<\/p>\n
Meanwhile, the East Kalimantan administration is preparing a
\nlawsuit against Rio Tinto and BP over the sale to Bumi.<\/p>\n
The province's legal representative said the lawsuit aims to
\nfocus a light on possible irregularities in the sale.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kpc-declares-force-majeure-due-to-strike-1447893297",
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"sponsor": "Okusi Associates",
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