Timah puts feelers out on buying KPC shares

Timah puts feelers out on buying KPC shares

JAKARTA (JP): Publicly listed state tin company PT Timah has
shown interest in acquiring a stake in the country's largest coal
mining company, PT Kaltim Prima Coal (KPC), a senior mining
official said yesterday.

"I've heard they (Timah and KPC) are negotiating now," Rozik
Boedioro Soetjipto, director general of mining at the Ministry of
Mines and Energy, told The Jakarta Post yesterday on the
sidelines of a luncheon meeting between Minister of Mines and
Energy Kuntoro Mangkusubroto and members of the Indonesian-
Australian Business Council (IABC).

Organized by IABC, the meeting drew 300 businesspeople from
Australian mining, oil and gas companies.

KPC has invited three state mining companies -- PT Timah,
publicly listed general mining company PT Aneka Tambang and coal
mining company PT Batubara Bukit Asam -- to buy 23 percent of its
stake to fulfill a mandatory divestment program.

Under the existing regulation, KPC is required under its
contract to divest up to 51 percent of its shares either to the
government, the Indonesian people or companies controlled by
Indonesians, between the fifth year and 10th year of its
commercial production.

KPC says the 23 percent of shares offered to Timah, Aneka
Tambang and Bukit Asam are valued at $176 million based on the
due diligence conducted by independent appraiser Jardine Fleming
Nusantara.

The three companies were given three months until Sept. 16 to
decide on the offer.

Aneka Tambang's operation director Harsojo Dihardjo earlier
indicated the company would probably reject KPC's offer.

"We are still studying the offer. But it is not part of our
priority at present," Harsojo said.

KPC initially wanted to sell its shares through the Jakarta
Stock Exchange, but the government decided that it should first
sell its shares directly through private placement.

The contract gives the government the right to decide the type
of divestment.

Rozik said the ministry had ordered KPC to first offer its
shares to the state mining companies. If none was interested in
the shares or able to buy them, KPC could offer its stake to the
Indonesian-owned private companies.

If none of the firms were interested in the offer or able to
buy them, KPC could sell its shares through the stock exchange.

"Selling through the stock exchange is the last option in the
divestment program," Rozik said.

KPC is equally owned by British Petroleum and Rio Tinto, both
from Britain, and operates a rich coal mine in Sangatta, East
Kalimantan. It signed a contract with the government in 1982 and
started production in 1992.

It is now the country's largest coal mining company, with a
projected output of 15 million tons this year.

It exports all its coal. With current coal prices of between
$25 and $35 per ton, the company will receive earnings of between
$375 million and $525 million this year.

Analysts say the planned acquisition of KPC's stake will have
a positive impact on Timah, which is currently being considered
by State Minister for the Empowerment of State Enterprise Tanri
Abeng as the future holding company of state mining companies.

Tanri earlier said the government was mulling two strategies
to privatize state mining companies, including the strategy of
merging Aneka Tambang and Bukit Asam with Timah as the holding
company prior to the privatization.

Another strategy would be to privatize them individually, he
said. (jsk)