KPC finally agrees to divest 51 percent shares

After more than a year of tedious negotiations, and delays, giant coal mining company PT Kaltim Prima Coal (KPC) finally agrees to divest 51 percent of its shares as demanded by the government and the East Kalimantan administration.

The Balikpapan-based Radar Kaltim reported that the agreement was made during a meeting with Minister of Mineral Resources and Energy Purnomo Yusgiantoro and the East Kalimantan administration late last week in Jakarta.

But the paper quoted Speaker of the Provincial Council Sukardi Djawoputro as saying that KPC would divest 44 percent of its shares based on the previous price agreement of US$238.74 million, while the price for the remaining 7 percent shares would still be negotiated with the government.

Sukardi added that the divestment would also be a two-stage process, in which KPC would first divest the shares to the central government via the ministry, which in return would hand over the shares to East Kalimantan administration, which holds the top priority to purchase the shares.

KPC, which is equally owned by Rio Tinto mining group and BP, is required to gradually divest its shares to local investor. The divestment was supposed to be already made last year, but it was delayed due to disagreement particularly with the East Kalimantan administration over the size of shares to be divested. The province said that according to the company's mining contract, it should divest 51 percent stake, while the company insisted that it was only obliged to divest 37 percent stake in the first stage. The government finally intervened, and asked KPC to divest a 51 percent stake.

Meanwhile, Sukardi said that the province would go ahead with its plans to report KPC to the National Police for alleged data manipulation. He pointed out that KPC had claimed that it started export in 1992, but it actually already started the activity in 1987.(*)