KPC lowers the value of its shares to US$1.7 billion

The East Kalimantan-based coal mine operator PT Kaltim Prima Coal (KPC) has agreed to lower the value of its entire shares to US$1.7 billion from the US$1.98 billion proposed to the government last year, Tempo daily reported on Wednesday.

Director General of Geology and Minerals at the Ministry of Energy and Mineral Resources Simon Sembiring said on Tuesday that the company lowered the value of its shares in line with the company's plan to reduce its future production targets.

"KPC reduces the production projections in line with the national coal policy," he was quoted as saying. KPC projected earlier to increase its production to 41.5 million tons a year by 2008 from about 25 million at present.

According to the Sembiring, the revised value of KPC's equity will be used as the reference to set the price of the 32.4 percent of the company's shares that should be divested to local investors.

KPC management and majority shareholder PT Bumi Resources earlier set the total value of its shares at US$1.98 billion but the government said it was too high.

Bumi Resources took over the entire stake of the coal company from Rio Tinto and BP for only about US$500 in 1992. However, the company is still required to follow the mandatory divestment program imposed on the former shareholders.

Under the divestment program, KPC should divest up to 51 percent to local investors. Bumi Resources, KPC's new shareholder, had already sold 18.6 percent of the company's shares to East Kutai regency's authority immediately after it took over the mining company last year. (*)