Tambang Batubara allocates $422 million to buy KPC shares

State coal mining firm PT Tambang Batubara Bukit Asam (PTBA) has allocated US$422 million for buying 51 percent shares of East Kalimantan-based coal mining giant PT Kaltim Prima Coal (KPC), Republika daily reported on Friday.

PTBA?s corporate secretary Munandar Saisohar said on Thursday a portion of the $422 came from a syndicate of state banks. He did not mention the banks however.

The government and KPC?s shareholders Rio Tinto and BP Plc agreed in March on a $822 million valuation of the entire KPC operation.

It remains unclear however when the bidding of the KPC shares will be opened. The secretary general of the Ministry of Energy and Mineral Resources Djoko Dharmono said recently the share offer will be from July 1 and September 30, while the East Kalimantan administration said KPC shares can be formally offered only after it has dropped its legal suit against Rio Tinto and BP Plc. The province, which insists to become the preferred bidder fo the 51 percent shares, last year sued KPC?s shareholders for $776 million in the South Jakarta district court in compensation for the delay of KPC share divestment.

Mundandar said: ?If PTBA succeeds to buy KPC shares, it would benefit a lot from that company.?

He argued KPC operates near coastal area and owns vessels with combined capacity to carry 150,000 tons of coal. Moreover, KPC?s coal is of quite high quality. Its coal is mostly for exports, Mundandar added.

Munandar admitted however PTBA would have to compete with other state companies and private investors which also had expressed interest to buy the 51 percent shares of KPC.

The state enterprises included miners PT Aneka Tambang and PT Timah, and electricity firm PT PLN; while private investors included PT Nusantara Energy, which is owned by Prabowo subianto, son-in-law of former dictator Suharto, PT. Borneo Batubara Batuah, and JSX listed PT. Bumi Resources which is controlled by bankrupt Bakrie Group.

The government decided recently to sell the 51 shares of KPC to state companies, Indonesian private investors and East Kalimantan provincial administration. But it has yet to decide the share portion for each of the three buyer groups.

KPC operates a huge coalmine in Sangatta in East Kutai Regency, East Kalimantan.

Meanwhile, PTBA operates in South Sumatra and is Indonesia?s top coal producer with its output reaching 10 million tons per annum.

The government will privatize PTBA in August this year through initial public offering on the Jakarta Stock Exchange. (*)