Fri, 18 Aug 2000

KPC waiting for govt action before making final decision

JAKARTA (JP): PT Kaltim Prima Coal (KPC) is waiting for the government to end a blockade of its mine in Sanggata regency, East Kalimantan, before issuing a final decision on whether it will maintain its operation or pull out of the province.

The KPC representative in Jakarta, Bambang Susanto, said the company was waiting for the government to disperse the KPC workers blockading the mine by next Friday.

"Given the circumstances, KPC has decided to defer a decision pending the outcome of this latest government initiative," Bambang said after the company's shareholders meeting on Wednesday.

The owners of KPC, Anglo-Australian mining company Rio Tinto and British-American oil and gas company Beyond Petroleum (BP), have discussed a number of options to cope with the impact of the workers' blockade and the actions which may be taken if the blockade continues, Bambang said.

KPC's operation remains closed amid faltering negotiations with some 200 striking workers who are demanding a salary increase.

The company has said that since the blockade began in mid- June, it has lost over US$50 million, or the equivalent to 1.85 million metric tons of coal.

The company declared force majeure to its customers earlier this month to avoid paying penalties for its inability to ship coal.

Bambang said KPC might declare force majeure to the government, which would exempt it from having to pay its full obligation as contained in its contract.

The government promised to end the blockade by Friday but the Indonesian Prosperous Labor Union (SBSI), which organized the strike, requested local police not to take any action against the workers until Tuesday next week.

"They (SBSI) said they needed more time for discussion among themselves," Bambang explained.

He said the local police had yet to response to SBSI's request. "But if the police decide to wait until Tuesday of next week, then KPC will also have to delay its decision until then."


The director general for mining at the Ministry of Mines and Energy, Surna Tjahja Djadjadiningrat, asked KPC to remain patient and give the police time to deal with the blockade.

"Everything now depends on the local police," Surna told The Jakarta Post on Tuesday.

Surna said a final resolution of KPC's case was beyond his authority and that he had called all related parties, including the Ministry of Manpower, to help settle the dispute.

"It is actually a matter of law enforcement, but does the National Police chief understand the importance of this matter?" he said.

He said there was little the government could do if KPC declared force majeure. "But it's not the material loss I am worried about, it's our reputation on the international market that is at stake now."

KPC is Indonesia's largest coal exporter, with markets in Asia, Europe and America.

SBSI chairman Muchtar Pakpahan said he was ready to lift the blockade on KPC's mine if the company agreed not to take disciplinary measures against the striking workers.

He said the main issue hampering a final settlement was not the salary increase, but the possibility that KPC might fire the strikers over trivial matters once they went back to work.

"I cannot allow the workers to face that threat after they struggled so hard to increase the salary of all KPC employees," he told the Post late on Tuesday.

He said KPC insisted on issuing warning letters to the workers taking part in the strike.

That measure, he said, was only a pretense to fire the workers for any minor violations of company regulation.

Bambang said KPC was determined to issue the warning letters, but said the reason for this was not the strike itself. "During the strike, the workers caused damage to several production facilities and also physically threatened other workers."

Bambang said the workers had a right to stage strikes as stipulated by law. However, he charged SBSI with violating the procedures for staging a strike, which he said made their action illegal. (bkm)