KPC says new partner(s) must guarantee integrity of operations

East Kalimantan based coal mining firm Kaltim Prima Coal said that company?s shareholders, Rio Tinto and BP, would prefer new local shareholder(s) that are able to maintain the company?s high standard of efficiency should be able to bring synergy in operating the giant mining.

?Rio Tinto and BP had been responsible for excellent management standard in KPC, we have access to technical expertise, ability to negotiate with suppliers from around the world and marketing know-how,? said Noke Kiroyan, KPC?s president director during a media briefing in Sangatta, East Kalimantan recently.

?We do not want our new partner(s) to ruin the efficient operation that we achieved through hard work and professionalism,? said Noke.

?The partners we are looking for are the ones that can create synergy with present shareholders. Take for example if we partners with Tambang Batubara Bukit Asam or Aneka Tambang, there is a potential that synergy can be created, but it?s not true if we partner with, say, a trading company which has no competency in mining operations.?

Acting chief operating officer Evan Ball also expressed the same concern.

?We are rated amongst the best managed coal mining operations in Indonesia in terms of productivity, efficiency, safety, environmental protection. For three or four years we have received top environmental and top safety award from central and provincial government,? he said.

?We fear that if new partners do not have the same vision and behave unprofessionally, the whole reputation could be ruined. As international company with reputation to maintain, BP and Rio Tinto would not like to get involved in the management operation that they did not have control over Especially if we have some unscrupulous parties that are not interested in spending money to maintain high standard safety and environmental but only seek short term gains.?

He said as a result of doubts over credibility of future shareholders, current shareholders had decided only to invest the minimum amount of capital just to keep the operations running

Under the coal contract of work, KPC is obliged to divest 51 percent of its stake to Indonesian owned business entities. The government and KPC shareholders had agreed the price for 100 percent of KPC?s shares is US$ 822 million. East Kalimantan provincial government backed by a little known company PT. Intan Bumi Persada which has link to tycoon Sudono Salim had been insisting to be given privilege as preferred buyer for the whole 51 percent shares. East Kalimantan provincial government had filed lawsuit against KPC and government, making KPC shareholders unable to offer shares to interested parties as mandated by the coal contract of work.

Other companies that have expressed interest are little known PT. Borneo Batu Bara Batuah, PT. Nusantara Energy, which is owned by Prabowo Suubianto, son-in-law of former dictator Soeharto, and PT. Bumi Resources, JSX listed company controlled by bankrupt conglomerate Aburizal Bakrie. Bumi also controls South Kalimantan based coal mining firm PT. Arutmin Indonesia.

The credibility of those companies are in doubt as they in the past have been known as corporate adventurers that had caused huge losses to the state. Many also doubt their ability to finance the transaction. (alex)