Bumi to continue deal with E. Kalimantan

Rendi A. Witular, The Jakarta Post, Jakarta

Publicly listed mining company PT Bumi Resources plans to hold discussions with the East Kalimantan administration on its right to control 31 percent shares in coal mining company PT Kaltim Prima Coal (KPC) in April 2004.

Bumi Resources president Ari S. Hudaja told the press on Friday that the company would still be committed to the government's decision that 31 percent of KPC shares should be set aside for the East Kalimantan administration.

"We will discuss the matter with East Kalimantan officials six months after we conclude our purchasing of KPC in October," said Ari in a public expose at the Jakarta Stock Exchange.

Bumi will acquire the entire stake in KPC from Anglo- Australian mining giant Rio Tinto and Anglo-American energy giant BP Plc. for US$500 million in a deal that has caused a furor among many parties in the country, including top officials in the central government and East Kalimantan administration.

Rio Tinto and BP each own a 50 percent stake in KPC through their registered investment vehicles in the Cayman Islands and Mauritius, respectively.

Ari explained that Bumi had already paid $40 million as initial payment and was currently seeking loans from overseas investment companies to fulfill the balance.

He said that the company should conclude the payment by October, or else Rio Tinto and BP would terminate the purchasing agreement.

KPC operates a huge coal mine in Sangatta, Kutai Timur regency, East Kalimantan, producing about 16 million tons of coal a year.

Last year, the government decided that the East Kalimantan administration might buy 31 percent of the company's shares and state-owned coal company PT Batubara Bukit Asam would buy another 20 percent.

Concerning the government's move to launch an investigation into Bumi's purchasing of KPC and the East Kalimantan province's plan to sue all parties involved in the purchasing deal, Ari said the deal did not violate any law.

He said that Bumi could not unveil the terms and conditions of the deal as of yet, due to a confidentiality agreement.

"We will publicly announce the details of the deal after we conclude the purchasing process," he said.