Rio Tinto given one week to submit written explanation on KPC share sale

The government Tuesday gave Anglo-Australian mining giant Rio Tinto one week to submit to it a written explanation about the sale process of its shares in East Kalimantan-based coalminer PT Kaltim Prima Coal (KPC) to Indonesian firm PT Bumi Resources.

With such an explanation, the government hoped to determine whether the deal contradicted KPC?s mining contract, the secretary general of the Ministry of Energy and Mineral Resources, Djoko Dharmono, told reporters after meeting with Rio Tinto?s officials. Also attending the meeting was Geology and Mineral Resources Director General Wimpy S. Tjetjep.

Rio Tinto and its equal partner in KPC, BP Plc, on July 16 signed an agreement sell to Bumi their companies, which own KPC. The firms were Rio Tinto?s Cayman Island-registered Sangatta Holding, which holds 50 percent shares in KPC, and BP?s Mauritius-based Kalimantan Coal Ltd, which holds the remaining 50-percent stake in the mining firm.

Rio Tinto and BP agreed with Bumi that the entire shares of KPC were valued at US$500 million.

Djoko said Tuesday Rio Tinto must also explain why the price of KPC shares was much lower than the $822 million agreed on by KPC shareholders and the government last year.

Last August, KPC formally offered to Indonesian investors, through the government, 51 percent of its shares in accordance with its contractual obligations. State coal producer PT Tambang Batubara Bukit Asam (PTBA) and East Kalimantan provincial administrations are actually in the process of buying the 51 percent shares.

Rio Tinto Indonesia vice president director Arif Siregar said Tuesday his company would submit in one week a written explanation about its deal with Bumi as required by the government.

Meanwhile, Djoko said that Rio Tinto officials said it would make sure that KPC would fulfill its contractual obligation to sell 51 percent of its shares to Indonesian investors after it was acquired by Bumi. (godang)