East Kalimantan to hold make-or-break meeting with KPC over divestment row

The East Kalimantan administration and provincial legislative council will meet with top management and shareholders of coal mining giant PT Kaltim Prima Coal (KPC) Thursday over divestment row.

Some say that the meeting, to be held in Jakarta at the ministry of energy and mineral resources, will be a make-or-break session.

Head of the East Kalimantan legislative council special team on KPC Agus Tantomo was quoted as saying by the local Kaltim Post daily that if no concrete results came out from the meeting, East Kalimantan would take a hard line action including asking the central government to withdraw the mining contract of KPC or shut down the coal mining operation temporarily.

?The alternative is to temporarily shut down the production,? Agus.

The Thursday meeting would be facilitated by caretaker Minister of Energy and Mineral Resources Purnomo Yusgiantoro. Reports have earlier said that both Rio Tinto and BP, the shareholders of KPC, had agreed to attend the meeting. East Kalimantan officials had earlier been disappointed as the absence of one of the shareholders had caused previous meetings to be fruitless.

KPC is obliged to immediately divest up to 51 percent stake to the local East Kalimantan administration. The remaining hurdle of the divestment program seems to be disagreement over price for the 51 percent stake. KPC insisted around US$448 million for the 51 percent shares, while the East Kalimantan administration wanted to pay only $319 million.

Meanwhile, the local Radar Kaltim daily quoted Agus as saying that minister Purnomo had sent a letter to KPC to lower its price for the 51 percent stake.

Agus expected KPC to come up with a more acceptable price offer at the Thursday meeting.

The East Kalimantan administration and legislative council has negotiated for the KPC stake for over two years now, creating some form of frustration among certain officials.(*)