Govt asks KPC to sell 20% stake to Bukit Asam

Govt asks KPC to sell 20% stake to Bukit Asam

The Jakarta Post, Jakarta

The government will order East Kalimantan-based coal mining
company Kaltim Prima Coal (KPC) to sell a 20 percent to 25
percent stake to state coal mining company PT Bukit Asam, a
senior official at the Ministry of Energy and Mineral Resources
said.

The government will also ask KPC -- a joint venture between
Anglo-Australian mining company Rio Tinto PLC and Anglo-American
energy firm BP PLC -- to sell a further 26 percent to 31 percent
stake in the mine to the East Kalimantan provincial government
and other local investors, Djoko Darmono, the ministry's
secretary-general, was quoted by Dow Jones as saying on Friday.

KPC's 30-year operating contract, drawn up under former
president Soeharto in 1982, stipulated that the company must sell
a 51 percent stake valued at US$410 million to an Indonesian
investor by the end of last year.

But the contract failed to determine who should get the first
claim to the stake, which has sparked a heated dispute over the
rightful ownership of the mine and delayed the sale.

East Kalimantan's government, allegedly backed up by several
local firms, has sought to control the 51 percent stake and filed
a lawsuit against the company at the South Jakarta District Court
in a bid to pressure the company to sell its stake to the
province. Pending the final outcome of the case, the court has
issued an injunction to sequester BP and Rio Tinto's Indonesian
assets.

Unfazed, KPC has insisted that there was no clause in the
contract stipulating that the stake must be sold to the province
and warned that it would not carry out the divestment process
until the province revoked its lawsuit.

Djoko said the ministry would send a letter to the provincial
government on Monday threatening legal action unless it withdraws
its suit by the end of this month.

Analysts said the central government's order for KPC to sell a
part of the stake to Bukit Asam would please the company as it
would deny the East Kalimantan province's chance to become a
majority shareholder in the coal firm. That would allow both Rio
Tinto and BP to retain control of the company as majority
shareholders.

But some analysts predict the province will react angrily to
the central government's policy and go out of its way to shoot it
down. The province's financial backers would not be interested in
buying the stake if they could not become a majority shareholder
in the firm.