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