Rio Tinto: divestment of KPC shares will be completed soon

The divestment of 51 percent stake at coal mining firm PT Kaltim Prima Coal to local entity will likely be completed soon, according to Noke Kiroyan, president of Rio Tinto, one of KPC shareholders.

Kiroyan was quoted by Neraca daily as saying that he recorded positive development in the negotiations with the government, although there was not yet a final decision over the pricing.

He said negotiating teams from KPC shareholders and the government would hold another meeting on Thursday in Jakarta to continue the negotiations. The government's team is likely to be headed directly by Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

When asked if KPC shareholders - Rio Tinto of Australia and Beyond Petroleum of Britain -- would lower its offer price, Kiroyan said that the price was a fair price as it was set by an appraisal company in Australia, Solomon Smith Barney.

Smith Barney valued the 100 percent stake of KPC at US$883 million. Based on the offer from KPC shareholders, the 51 percent stake at KPC would cost the local entity about $444 million. Meanwhile, the East Kalimantan administration, that has been eyeing the KPC stake for so long, has bargained it at a bit over $300 million.

Kiroyan said that he would welcome if the government wanted to appoint an independent appraisal company. But he suggested that such an appraisal company not come from Australia, Britain or Indonesia.

Meanwhile, Bisnis Indonesia reported that two local businessmen, David Salim and Tomy Winata of the Artha Graha group had been reportedly shown their interests in acquiring KPC stakes.

Kemal Syamsuddin, financial advisor of the Artha Graha group, has been seen visiting the office of the Directorate General of Geology and Mineral Resources on Jl. Soepomo, South Jakarta.

Some have speculated that Kemal is lobbying Director General of Geology and Mineral Resources Wimpy S. Tjetjep to get KPC stake for Artha Graha.

But Wimpy refuted such speculations saying that the government would prefer the East Kalimantan administration to any local private company to acquire KPC stake.

To buy KPC stake, the East Kalimantan administration does not need a back-up from private company," he said.

Earlier reports said that the government would likely use Kemal Syamsudin to appraise the value of KPC stake. (*)