Plan on coal mining divestment opposed

JAKARTA (JP): The Association of Indonesian Mining Professionals (Perhapi) has called on the government not to intervene in the mandatory divestments of foreign coal mining contractors.

Association chairman Herman Afif Kusumo said yesterday foreign mining companies should be allowed to select the companies buying their shares.

"Let them choose companies which they think are professional, reliable and experienced," Herman said.

Herman made the remarks following a report that Director General of Mining Adjat Sudradjat had ordered foreign coal mining companies to divest their shares through direct private placements to certain local companies.

Under mining contracts, foreign coal mining contractors are obliged to divest a part of their shares after five years of production through three alternative means decided by the government.

Contractors first have to offer their shares to the government.

In cases when the government turns down the offer, the government decides if the contractors have to list their shares on the stock market or sell them to locally owned companies through direct private placement.

PT Kaltim Prima Coal (KPC), the country's largest coal producer based in East Kalimantan, will sell 23 percent of its shares to fulfill the mandatory requirement.

Adjat said he wanted the company to sell the shares directly to four local companies.

The companies are state coal mining company PT Tambang Batubara Bukit Asam, military foundation Yayasan Markas Besar ABRI (Yamabri), PT Iroda and PT Pakarti Trimitra.

Sources have said some of the companies were experiencing shortages of cash, while others had no experience in coal mining.

Iroda and Pakarti are reportedly owned by family members of top officials.

Herman said if the Ministry of Mines and Energy wanted KPC to divest its shares through direct private placement, it had to give the company the freedom to choose would-be buyers for their shares, or it should give the company alternative firms to choose.

"It's time for us to apply fair and transparent policies," Herman said. (jsk)