Bumi Resources to sell its 32.4 shares in KPC to PT Strade

Bumi Resources, the majority shareholder of the East Kalimantan-based coalminer PT Kaltim Prima Coal (KPC), plans to sell its 32.4 shares in the coal mining company to relatively unknown local company PT Strade Nusaglobus, Koran Tempo reported on Friday.

Sources told the daily that the agreement to sell the shares to PT Strade had been signed on March 31, 2005, in which the company agreed to buy the 32.4 percent in KPC for US$ 400 million.

"At present, Bumi Resources is seeking the government's approval for the deal," one of the sources said. Director General of Geology and Mineral Resources at the Ministry of Energy and Mineral Resources, Simon Sembiring confirmed that Bumi Resources had sent a letter asking for the government's green light for the sale of its shares.

But he refused to elaborate, saying that the approval was being processed.

KPC, under its contract of works, should divest up to 51 percent to local companies but the divestment could not be carried out smoothly because East Kalimantan provincial government insisted to buy the entire 51 percent share.

When the negotiations were still at its peak, former shareholders Rio Tinto and BP secretly sold their entire shares in KPC to Bumi Resources, causing wide controversies and oppositions from the East Kalimantan government.

Bumi Resources, KPC's new shareholder, had already sold 18.6 percent of the company's shares to East Kutai regency's authority immediately after it took over the mining company two years ago. The deal was sanctioned by the government but many saw the deal as just paper deal as until now, Bumi never recived payment from the regency.

Bumi needs to sell another 32.45 percent of the KPC shares to fulfill the mandatory divestment requirement. (*)