Bukit Asam to spin off Ombilin unit
Tuesday, March 7 2000 - 04:00 AM WIB
The state owned coal-mining company PT Tambang Batubara Bukit Asam (PT BA) will spin off its Ombilin coal mining operation in a bid to smooth its planned initial public offering (IPO), the company's president Sunardi said in Jakarta on Monday.
Speaking at a hearing with the House of Representatives (DPR), Sunardi said that the spin-off policy was needed to ensure that the company's IPO which would be launched this year would receive a positive response from foreign investors.
He said that if the Ombilin mining unit remained part of the company's assets, the IPO would not be attractive enough to foreign investors because the high production costs at the Ombilin mining site would damage the overall financial outlook of the company.
He said that the production cost at the Ombilin unit, which is located in West Sumatra province, reached between US$29 and $30 per ton, far higher than the international standard.
PT BA, one of several state companies which have been put under the government's privatization program this year, operates two major coal mining sites; one operated under the name of Bukit Asam mining unit located in South Sumatera and the other one called Ombilin mining unit located in West Sumatera.
Sources said that PT BA's planned IPO received a wide opposition from the West Sumatran people, who threatened to do any things if the mining site was included in the privatization program.
The same thing happens to the East Java-based state cement producer PT Semen Gresik, which wholly owns PT Semen Padang in West Sumatera. Semen Gresik also plans to spin off its Padang unit to smooth its privatization program, which has been widely protested by the West Sumatera people. (*)