KPC to divest only 37 percent stake this year: Rio Tinto

The East Kalimantan coal mining giant PT Kaltim Prima Coal (KPC) will only divest up to 37 percent stake this year as required by its contract with the government, according to president of Rio Tinto Noke Kiroyan.

Rio Tinto holds 50 percent of KPC, while the other half is held by British Petroleum.

Kiroyan was responding to earlier press reports quoting director general of mining Surna T. Djajadiningrat as saying that KPC would have to divest up to 44 percent stake this year. Surna made the statement following pressure from the East Kalimantan administration that based on their calculation, KPC should divest a 51 percent stake this year. The administration has said that it would buy the KPC stake, and wanted a majority.

But Kiroyan said that the government had not yet proposed the new divestment obligation to the company.

He, however, stressed that KPC would base its divestment program on the existing contract, and warned the government not to force its will by raising the divestment obligation to 44 percent.

"We appreciate the government intention to accommodate the aspiration of the province. But this doesn't mean that the contract should be neglected. I think it will cause serious losses to the government if it force its will because it means that the government neglect the contract it signed with KPC," Kiroyan said. (*)