KPC owners from London to visit Jakarta next week

P.T. Kaltim Prima Coal (KPC) confirmed today that the latest blockade of its operations in Sangatta, East Kalimantan by some members of the SBSI union had entered its tenth day.

President Director Grant Thorne commented, "Shareholders from London and our Indonesian Commissioners meet early next week. If the operation is still closed at that time, we expect they will be forced to make hard decisions".

KPC has been unable to supply its customers with coal since the 7th August when stocks at KPC's port were exhausted Force Majeure was declared on Sales Contracts on that day to minimise the costs to KPC of its failure to meet its sales commitments.

"With blockaders having taken control of most of the mining equipment, we are unable to offer productive work to many of our employees," said Dr Thorne.

Since SBSI first began its illegal strike and blockade on 14th June, KPC has lost production of 1.85 million tonnes of coal with a sales value of US$ 50 million. "This is a tragedy for the company, the Government, and the community. The loss to the Indonesian Government in Royalty and Corporate tax alone amounts to Rupiah 92 billion" added Dr Thorne.

KPC revealed that it had lost sales to foreign competitors and expressed fears that Indonesian producers generally in future would face tougher negotiations with potential buyers. Dr Thorne observed: "It is easy to cast Indonesia as an unreliable supplier. Customers understand occasional strikes but they can tell the difference between a strike and a blockade. It is the complete absence of law enforcement that bothers them most. They prefer to buy where the law provides certainty to business operations"

For further information please contact: Bambang Susanto, General Manager External Affairs, Phone: 021-527 4208 (*)