Rio Tinto says KPC divestment negotiation deadline extended

Indonesian unit of Anglo-Australian mining giant Rio Tinto said Wednesday that the government and shareholders of coal mining firm PT Kaltim Prima Coal (KPC) had agreed to extend price deliberation deadline on KPC divestment to March 31, 2002, according to a company official.

Rio Tinto and BP Plc equally own KPC.

?What we have agreed for in last Friday meeting was to extend the divestment price deliberation deadline to March 31, not the divestment deadline itself,? said Nunik Maulana, Rio Tinto Indonesia?s spokesperson.

She said if government and KPC shareholders reached agreement on price, the 51 percent shares of KPC would be offered to interested Indonesian business entities, as required by coal contract of work.

?If, by March 31 both parties can not agreed on the price, then KPC shareholders will come up with new price, ? said Nunik.

Nunik also denied earlier report that the meeting agreed to pay some compensation to East Kalimantan administration should price negotiation failed by the end of the deadline.

?At the meeting, government suggested us to do so, but we haven?t agreed yet,? said Nunik.

Under the coal contract of work, KPC is obliged to divest up to 51 percent stake to Indonesian business entities. The negotiation for the divestment has been going on for around two years, causing some frustration among East Kalimantan government officials and legislators who are interested to acquire the stake. The most difficult issue is now in deciding the price for the 51 percent stake.

Some East Kalimantan officials had earlier indicated of a possible extension in the divestment deadline, but they wanted KPC to set aside a certain amount of dividend for the administration as a compensation for the delay.(Alex)