Government to retender Kaltim Prima Coal’s shares

The government will continue its plan to retender up to 51 percent of the East Kalimantan coal mining company Kaltim Prima Coal (KPC) although the company is now under the control of local company PT Bumi Resources, Koran Tempo reported on Wednesday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Tuesday that the auction of the coal mining company’s shares would be reopened in the first quarter, next year.

The minister said that the plan to retender KPC shares was discussed during a limited cabinet meeting which was held in Jakarta on Tuesday. The meeting which was led by Coordinating Minister for Economy Dorodjatun Kuntjoro-Jakti had also discussed several scenarios of KPC’s divestment plan.

Purnomo said that if the tender of the coal company’s shares could not be carried out as planned, the government would offer two options in divesting the company’s shares. One is to readopt the divestment alternative that was made before KPC was taken over by Bumi Resources. Under this option, state owned coal company PT Bukit Asam will be appointed to buy 20 percent of the shares, and a consortium of East Kalimantan provincial administration and the East Kutai regency to buy the other 31 percent.

The other option would allow the central government to take over all the 51 percent of the shares, he said. “We will report to the President about the retender plan tomorrow (Wednesday),” he said.

Last year, Bumi Resources took over 100 percent of East Kalimantan-based coal producer Kaltim Prima Coal from Rio Tinto and BP, which respectively owned 50 percent of the coal mining company.

The takeover move surprised the mining community in the country because the deal was made when KPC shareholders were still negotiating the sales of their 51 percent ownership to local investors. Under its contract of works, KPC shareholders were required to divest up to 51 percent of its shares to local shareholders through the ministry of energy and mineral resources. According to the mandatory divestment requirement, the divestment of the 51 percent should have been completed by 2001 but it was delayed due to difference in prices.

The government’s plan to retender the divestment of KPC would make things more confusing given the fact that current shareholder Bumi Resources had its own divestment scenario.

Bumi, which said it is still committed to following the mandatory divestment despite its takeover, negotiated in November last year the sales of KPC’s 51 percent shares to a consortium called Melati Intan Bhakti Satya comprising of Bukit Asam (to buy 3.98 percent of the 51 percent shares), East Kalimantan provincial administration and East Kutai regency (to buy 6.2 percent) and Intan Bumi (40.20 percent).

The things became more complex because Bumi had earlier made a commitment to sell 18.6 percent of the shares to East Kutai regency. It meant that the amount of the shares that are available for divestment had declined to 32.4 percent. (*)