KPC, East Kalimantan , Govt fail to agree on divestment price

The negotiators representing the ministry of energy and mineral resources, East Kalimantan provincial administration and shareholders of coal mining company PT Kaltim Prima Coal (KPC) failed to agree on the selling price of the coal company?s shares, East Kalimantan-based newspapers reported Tuesday.

Kaltim Post and Radar Kaltim dailies said that during the negotiations Monday at the Regent Hotel in Jakarta, KPC?s shareholders ? that is Anglo-Australian mining giant Rio Tinto and Anglo-American energy firm BP Plc ? insisted that all KPC stake were valued at $880 million and the 51 percent stake $448.8 million.

The ministry, which was represented by director general of geology and mineral resources Wimpy S. Tjetjep, valued the whole stake at $607.72 million and the 51 percent stake at $309.937 million.

Meanwhile, the East Kalimantan council?s special committee for the KPC divestment set the price for the 51 percent stake at $319.08 million, the papers quoted by Andi Harun, secretary to the special committee as saying following the negotiation.

?Today?s (Monday) meeting will be followed up with another meeting next Monday at the East Kalimantan council. All participants of the meeting are expected to attend the next week meeting which will focus on the price of the 51 percent shares,? Andi said.

Under its contract of work, KPC, which operates a huge coal mine in Sangatta, East Kalimantan, is obliged to sell a 51 stake this year. The East Kalimantan provincial administration has voiced interest to buy the stake.

Andi said the negotiation was tough and he suspected that KPC shareholders intentionally set a high price for its stake in order to delay the divestment program.

Accordin to him, the KPC shareholders valued the whole stake in the company at $880 based on the coal price of $33.39 per ton.

?We and the central government based the valuation on the coal market price of $26 per ton,? he said.

The KPC shareholders proposed the stake price be revaluated but the proposal was rejected by the council?s special committee members, who suspected it as another strategy for the KPC shareholders to delay the divestment program.

Andi warned that if no agreement was reached during the next week meeting, the committee would ask KPC to temporarily stop its production until there is a deal over the divestment.

If KPC refused to stop production, Andi further warned, the council would call on the East Kalimantan people to forcibly stop the production, (*)