Strike ends, KPC expects full production next week

Strike ends, KPC expects full production next week

Evi Mariani, The Jakarta Post, Jakarta

After going on strike for several weeks, about 2,300 workers of
East Kalimantan-based PT Kaltim Prima Coal returned to work on
Sunday morning.

KPC's management expects the coal mining firm to be in full
production some time next week.

"We hope in less than a week the company will come to full
production and begin to supply our customers again," KPC's
spokeswoman Nunik Maharani Maulana told The Jakarta Post on
Monday.

Chaerullah, a spokesperson for the striking workers, confirmed
Nunik's statement, noting that the workers had agreed to resume
work despite the fact that the workers and the management still
disagreed on several issues.

"We complied with the Kutai Timur regent's appeal, as the
mediator, to get back to work while negotiating the unsettled
issues," he told the Post on Monday.

Chaerullah and Nunik said separately that the remaining
differences between the workers and the management concerned the
formula to be used to distribute the goodwill payment and the
question if the goodwill payment was subject to income tax.

Nunik said that there would be no sanctions imposed on the
strikers, but it was agreed they would not receive wages while
they were on strike or their third quarter bonus.

Chaerullah said he expected the discussion on the two matters
would start Tuesday.

The workers went on strike following a move by KPC's
shareholders -- Anglo-Australian mining company Rio Tinto and
Anglo-American energy company BP Plc -- to sell their entire
stake in the coal firm to PT Bumi Resources for US$500 million.

Arguing they had made a large contribution to the development
of the company, the workers insisted that the shareholders should
have consulted them prior to the sale and give them a cash bonus
from the sale.

The strike had been painful for KPC as it caused an estimated
daily loss of $500,000 and prompted the company to declare force
majeure on its obligation to buyers.

After long and thorny discussions, KPC's shareholders agreed
to pay a so-called "goodwill payment" worth Rp 50 billion or
about $6 million to all KPC workers.

Last Tuesday, the workers and the management, mediated by the
Kutai Timur regency administration, came to several agreements.
As a result, the workers started to work the following day, only
to strike again after three hours of work, upon learning the
management would impose sanctions on some of them and that the
goodwill payment would be deducted to pay income tax.

The strike has angered many parties, including Minister of
Manpower and Transmigration Jacob Nuwa Wea, who insisted the
strike was illegal.

The business community said the strike would set a bad
precedent that would worsen the investment climate and scare away
foreign investors.