KPC asks three state mining firms to buy stakes

JAKARTA (JP): The country's largest coal mining company PT Kaltim Prima Coal (KPC) has invited three state mining companies PT Tambang Timah, PT Aneka Tambang and PT Batubara Bukit Asam to buy 23 percent of its stake to fulfill a mandatory divestment program.

The three companies have been given three months to decide on the offer, KPC said according to letters sent on June 16 to the three companies, copies of which were made available to The Jakarta Post yesterday.

KPC will allow the three companies to carry out due diligence before making deals.

KPC says its 23 percent of shares are valued at $176 million based on the due diligence conducted by independent appraiser Jardine Fleming Nusantara.

A spokesman for KPC, Ali Nurdin, confirmed the direct private placement offering to The Post, saying KPC believed the three companies would give KPC "added value" as shareholders in the company.

"The added value would be in terms of management, experience, and technology," he said.

Tambang Timah, listed in Jakarta and London, is known as one of the world's most efficient tin mining companies, while Aneka Tambang, listed in Jakarta, is one of the country's leading mining firms with operations including ferronickel, gold, silver, bauxite and iron sand. Bukit Asam is the country's oldest and second largest coal mining company.

KPC is required under its contract to divest up to 51 percent of its shares either to the government, the Indonesian people or companies controlled by Indonesians, between the fifth year and 10th year of its commercial production.

According to the contract, the government decides on the type of divestment.

Divest

KPC initially wanted to sell its shares through the stock market but the ministry wanted the company to divest its shares through direct private placement.

Director General of Mining at the Ministry of Mines and Energy Rozik Boedioro Soetjipto said the government would not be involved in the selection of the buyers of the company's shares.

KPC is equally owned by British Petroleum and Rio Tinto, both from Britain, and is operating a rich coal mine in Sangatta, East Kalimantan.

It signed a contract with the government in 1982 and started production in 1992. Thus far, it has invested $750 million.

It is now the country's largest coal mining company, with a projected output of 15 million tons this year.

The company exports all its product to Japan (32 percent), Taiwan (24 percent), Hongkong (12 percent), Europe (12 percent), America (7 percent) and other Asian countries, including the Philippines, (4 percent).

With current coal prices of between $25 and $35 per ton, the company will receive earnings of between $375 million and $525 million this year. (jsk)