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)