Local govt may halt foreign-owned mine<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The East Kalimantan provincial administration threatened on
\nWednesday to stop the operations of coal mining firm PT Kaltim
\nPrima Coal (KPC), following a surprise decision by Rio Tinto and
\nBP Plc to sell full ownership of the company to PT Bumi
\nResources.<\/p>\n
East Kalimantan Governor H. Suwarna A.F was quoted by Antara
\nas saying the sale of the KPC shares was a violation of KPC's
\ncontract.<\/p>\n
KPC operates a vast mining site in East Kalimantan's Sangatta
\narea, producing some 16 million tons of top quality coal
\nproducts, which are mostly exported to the Asia-Pacific market,
\nEurope and the U.S.<\/p>\n
The East Kalimantan administration has been eying a stake in
\nKPC, particularly with Rio Tinto and BP, the original owner of
\nKPC, required to relinquish up to a 51 percent stake in the
\ncompany to local investors under the 1982 mining contract it
\nsigned with the central government.<\/p>\n
But for three years, the Anglo-Australian mining giant and the
\nBritish-American energy conglomerate have been locked in a
\nlengthy dispute with the local administration, causing further
\ndelays in the divestment program, which should have been
\ncompleted in 2001. This has prompted the central government to
\nintervene.<\/p>\n
The government decided a 31 percent share in KPC would be sold
\nto the East Kalimantan administration, and the remaining 20
\npercent stake to state-owned mining firm PT Tambang Batubara
\nBukit Asam. It was agreed that a 100 percent stake in KPC would
\nbe valued at US$822 million.<\/p>\n
But earlier this week, both the central government and East
\nKalimantan were caught off-guard by the unexpected decision of
\nRio Tinto and BP to sell their overseas registered holding
\ncompanies, which equally owned the KPC shares, to Bumi Resources
\nfor the relatively cheap price of $500 million.<\/p>\n
State Minister for State Enterprises Laksamana Sukardi was
\nclearly infuriated by the decision, made at a time when the
\ngovernment was helping to facilitate the original divestment
\nplan.<\/p>\n
Laksamana plans to summon Rio Tinto and BP officials.<\/p>\n
A number of East Kalimantan provincial lawmakers backed
\nSuwarna's threat to shut down KPC's operations.<\/p>\n
"KPC has disappointed us too many times. We didn't ask for a
\n51 percent stake in KPC for free; we were going to buy it," Abdul
\nHamid, a lawmaker from the United Development Party (PPP), said.<\/p>\n
Bumi Resources said it would abide by the 1982 mining
\ncontract, and would continue with the divestment of a 51 percent
\nstake in KPC.<\/p>\n
But company president commissioner Soeryo Sulistyo was quoted
\nby detik.com as saying that Bumi Resources had yet to decide on
\nthe timing or the size of the divestment.<\/p>\n
Soeryo added that the company would seek foreign financing,
\nincluding from banks in Singapore and Switzerland, to finance the
\npurchase of the KPC shares. The acquisition is expected to be
\ncompleted in October.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/local-govt-may-halt-foreign-owned-mine-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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