KPC proposes new divestment price

East Kalimantan coalminer PT. Kaltim prima Coal (KPC) has submitted to the government new divestment price of US$1.987 billion for 100 its entire shares, or more than double its 2002 price of $822 million, Koran tempo reported Monday.

Under the coal contract of works, KPC is obliged to divest another 32.4 percent of its shares to Indonesian-owned business entity, after it sold 18.6 percent shares to East Kutai regency administration this year.

The KPC- proposed-price is not yet final, as the government will conduct negotiation with KPC to determine final 2004 divestment price.

KPC director Eddie J. Soebari when contacted by the daily said that the price increase was due to almost-tripling of coal price from $28 per ton in 2002 to $64 per ton currently and KPC?s production capacity expansion.

Even though KPC is currently controlled by Bumi Resources, an Indonesian company, government still obliged KPC to divest shares as Bumi?s control was done through foreign-based paper companies.

Bumi bought KPC for US$ 500 million in 2003 from former owners Rio Tinto and Bp Plc. (*)