Rio Tinto says East Kalimantan has dropped civil lawsuit against KPC

Rio Tinto, which partly owns coal miner PT Kaltim Prima Coal (KPC), said on Tuesday the East Kalimantan provincial administration had dropped its civil lawsuit against KPC shareholders, thus paving the way for KPC to start offering 51 percent of its shares.

?Our lawyers are trying to check with the South Jakarta district court about the province?s request to drop its civil lawsuit,? Rio Tinto Indonesia deputy director Anang Noer told Petromindo.Com.

Anang said their lawyers early on Tuesday had received from East Kalimantan?s lawyers a copy of the letter the province had sent to the South Jakarta district court stating that it wanted to drop its civil lawsuit against KPC shareholders.

East Kalimantan-based KPC, equally owned by Rio Tinto and BP PLC, is set to start offering 51 percent of its shares to Indonesian parties by July 31 in accordance with KPC?s contractual obligations. There were worries that the share offer could not be made by July 31 because there was no clear sign East Kalimantan would drop its civil lawsuit against Rio Tinto and BP PLC by end-July.

The East Kalimantan administration early this year filed civil and asset seizure lawsuits in the South Jakarta district court against KPC shareholders accusing them of blocking it from acquiring the entire 51 percent KPC shares. As a consequence, the court seized KPC assets, thus disallowing the company to sell its shares.

Following mounting pressures, East Kalimantan recently dropped its asset seizure lawsuit, but KPC shareholders insisted that East Kalimantan must also drop its civil lawsuit otherwise the firm would be unable to start offering its shares.

KPC operates a huge coalmine in Sangatta in East Kutai, East Kalimantan. It is Indonesia?s most profitable coal miner.

The original plan was that KPC would divest 51 percent of its shares to Indonesian investors by the end of 2001. But the divestment plan was delayed to end-March, and eventually to July 31 of this year because of East Kalimantan?s insistence that it become the preferred bidder for the shares.

The central government and KPC shareholders early this year agreed on a US$822 million valuation of KPC entire operation.

Meanwhile, the central government decided that KPC shares will be sold to state enterprises, Indonesian private investors and East Kalimantan. (godang)