KPC's operations normal amid protest

KPC's operations normal amid protest

Dow Jones, Jakarta

Several hundred protesters are still protesting peacefully Monday near the coal mining site of PT Kaltim Prima Coal (KPC) in a remote jungle in East Kalimantan, the company said.

However, the protest hasn't disturbed the company's operations so far, KPC said.

The protesters arrived at the KPC area Sunday and commenced a protest near the entrance to the mining site, it said.

"The reason for the protest is not yet clear, however, it appears to be linked to KPC's divestment process obligations," the company said in a written statement.

Anglo-Australian mining company Rio Tinto and BP PLC, which jointly own KPC, are bound under their 30-year operating contract, signed under the government of former dictator Soeharto, to sell a 51 percent stake in the mine to Indonesian investors.

KPC was supposed to hand over the stake, which is worth US$420 million, by the end of 2001, but the process was delayed due to a legal battle with the East Kalimantan government over who should get control of the mine.

Emboldened by new laws to give more power to the regions, East Kalimantan province, where the mine is situated, has been demanding KPC sell it the entire 51 percent stake.

The central government decided last year that a 31 percent stake in the mine, one of Indonesia's most profitable coal mines, would be sold to the East Kalimantan government, and 20 percent to state-owned coal miner PT Tambang Batubara Bukit Asam.

Foreign investor confidence has taken a hit from the dispute, which has shown the difficulty of doing business in Indonesia in the absence of strict contract law.