Coal mining operator Kideco will divest 44 percent of its stake

Kideco Jaya Agung (Kideco), a subsidiary of South Korea-based Samtan Co Ltd, will sell 44 percent of its shares to local investors as part of the mandatory divestment requirement imposed by the government to foreign mining companies in Indonesia, Bisnis Indonesia reported on Friday.

Director General of Geology and Mineral Resources at the Ministry of Energy and Mineral Resources, Wimpy S. Tjetjep, said in Jakarta on Thursday that the company which operates coal mining areas in East Kalimantan should divest 44 percent of its shares this year.

Wimpy said that the provincial administration had sent a letter requiring the ministry to become one of the bidders of the shares that would be divested by Kideco which started its mining operation in East Kalimantan in 1982.

According to the company?s contract of work, the company should gradually divest up to 51 percent of its shares after 10 years of its commercial production. Last year, the company was required to sell 37 percent of its shares as part of the mandatory divestment program but the offer did not receive positive response from local investors.

As the auction of the 37 percent of the company?s shares could not be realized last year due to lack of investors? interest, Kideco should divest at total of 44 percent this year.

Wimpy said that seven local mining companies including Gunung Bayan, Pratama and Tanito Harum had expressed their interest to bid for Kideco?s 44 percent share but he did not unveil when would the formal auction of the shares would be launched.

According to him, the total value of Kodeco?s shares are worth US$376 million. "But bidders and Kideco shareholder are still allowed to negotiate the prices," he said. (*)