KPC denies rumors it has stopped production

Rumors have been ripe that coal mining company PT Kaltim Prima Coal has stopped its operation because of heated negotiations between KPC in one side and local administrations and legislative councils in the other side over the divestment of 51 percent stake at KPC.

However, the rumors were denied by KPC external and community relations manager M. Chairul and KPC Balikpapan representative Hasrul Sani, Suara Karya daily reported on Friday (August 3).

"That's not true. KPC never stops its production because it will only inflict losses," Chairul said in Balikpapan, East Kalimantan, on Wednesday.

He said if the production activities were stopped, KPC, that currently produces 150 tons of coal per day, would lose Rp 1.5 billion per day.

"The government will also bear the losses because 40 percent of KPC earnings is submitted to the government in the form of taxes and royalties," he said.

Chairul added that it was almost impossible for KPC to stop operation because it would adversely affect economic activities in the town of Sangatta, where the mining company is operating, and its surrounding areas. In addition, it would also left thousands of people, currently working for KPC, jobless.

Moreover, the stoppage of operation would also affect investment climate in Indonesia, especially in East Kalimantan.

Chairul and Hasrul also denied news reports that KPC shareholders -- Rio Tinto and BP Plc. -- did not want to sell its stake to East Kalimantan administration, but only stayed their offer price.

"The public must understand about that. We never intend to block the wish of the East Kalimantan administration to buy the stake," Hasrul said.

Earlier, Rio Tinto president Noke Kiroyan said that KPC shareholders could basically sell its stake to any party in Indonesia, not necessarily East Kalimantan administration or the already appointed local company. (*)