KPC refuses to lower price of its 51% stake
KPC refuses to lower price of its 51% stake
JAKARTA (JP): East Kalimantan-based coal mining company Kaltim
Prima Coal (KPC) insisted on Monday that the local administration
should pay US$448.8 million for its 51 percent stake.
Anglo-Australian mining firm Rio Tinto, one of the coal
producer's major shareholders, said that KPC had no intention of
cutting the price, as demanded by both the local and central
governments.
"We don't have any plan to lower the price," Rio Tinto
Indonesia spokeswoman Nunik Maulana told The Jakarta Post.
Nunik said the price tag for the 51 percent stake was fair
because its calculation considered several factors, including the
size of the existing coal reserve and future prices for the
commodity.
After tough negotiations, KPC, which operates a huge coal mine
in Sangatta, Kutai Timur regency, East Kalimantan, agreed early
this year to sell 51 percent of its stake to local investors in
order to meet the mandatory divestment program imposed by the
government on foreign mining companies.
The East Kalimantan provincial administration is the only
party who has bid for the stake.
KPC's valuation of its 51 percent stake is much higher than
the $309.94 million calculated by the Ministry of Energy and
Mineral Resources and the $319 million appraisal of the East
Kalimantan administration.
Both the ministry and the local administration demanded that
KPC lower its price but the company has so far refused.
The three parties have conducted several meetings, the last of
which was chaired by Minister for Energy and Mineral Resources
Purnomo Yusgiantoro last Thursday in Jakarta, in an attempt to
renegotiate the price of the stake. However, no resolution to the
stalemate was reached.
Nunik said that KPC had asked the government to appoint two
separate appraisers for each party to determine a fair price of
the stake, but the government has not yet responded to the
request.
The provincial administration has reportedly objected to the
establishment of a joint independent appraiser, describing it as
a tactic of KPC aimed at delaying its divestment program.
Local councillors at the provincial level have asked the
government to terminate KPC's mining contract, but their
colleagues in the Kutai Timur regency have opposed the move.
Nunik said that KPC had not persuaded any councillors of the
Kutai Timur regency to reject the proposal.
"We have a good relationship with the regency's legislature as
well as other institutions because we do business there, that's
all," she said.
KPC, which has about 10,000 workers, produces an average of
50,000 tons of coal a day, or 15 million tons a year.
KPC is jointly owned by Anglo-Australian mining company Rio
Tinto and British-American oil and gas company Beyond Petroleum
(BP).(05)