East Kalimantan authority insists to control 51% of KPC shares

The provincial administration of East Kalimantan province will continue efforts to take over 51 percent shares in coal giant PT Kaltim Prima Coal (KPC), Kaltim Post reported on Friday.

"We are not going just to keep silent. We will continue our efforts to control KPC's 51 percent shares," said the secretary of the East Kalimantan administration, Syaiful Teteng.

He said that the local state administration court's recent decision was in favor of the East Kalimantan administration to get the sole rights to buy KPC's 51 percent shares. "But we have to wait the Jakarta state administration court's decision over the appeal made by KPC management before making any further move," he added.

Syaiful said that the East Kalimantan government will cooperate with PT Intan Bumi Intl Perdana (IBIP) to take over KPC's 51 percent which are worth about US$453.39 million. "We have chosen IBIP as our partner because the company will give 10 percent of the shares to the East Kalimantan government for free," he added.

Former KPC shareholders Rio Tinto and BP were required to divest up to 51 percent of its stake in the coal producer two years ago as part of the mandatory divestment requirement stated in the company's contract of work.

But instead of selling the majority stake of the East Kalimantan-based coal miner to the provincial administration, Rio Tinto and BP sold the entire shares to local firm PT Bumi Resources.

Bumi Resources is currently preparing the divestment of KPC's 32.4 percent shares. The other 18.6 percent shares had been sold to East Kutai government immediately after Bumi Resources took over the entire KPC shares from Rio Tinto and BP.(*)