Divestment - but not yetPublished by MAC on 2001-05-01
Divestment - but not yet
In March 1998, the Association of Indonesian Mining Professionals (Perhapi) told the regime not to insist on an unthinking and mandatory divestment of shares from foreign ownership to Indonesians, but allow coal companies to choose their own future partners. The Director General of Mining wanted to sell KPC 's allotted 23% privatisation stake to Bukit Asam, PT Aroda, PT Pakarti Trimitra, and the military, through its own foundation, Yayasan Markas Basar ABRI [Jakarta Post March 16 1998]. Perhapi protested that some of these companies were strapped for cash, while ABRI had no experience in coal mining. Three months later, KPC offered this "public" share to PT Bukit Asam, PT Aneka Tambang (ANTAM) and PT Tambang Timah [Jakarta Post June 26 1998].
But Bukit Asam and ANTAM dropped out of the bidding and it was not until March 1999 that the world's biggest tin miner, Indonesia's 65% state-owned PT Tambang Timah, announced that it would purchase a 30% stake in KPC, hoping to finalise the deal by this summer. Back in 1996, when it secured nearly 18,000 square kilometres of territory for exploration in Kalimantan, Timah said it aimed to become a major diamond, gold and coal producer by the turn of the century [Mining Journal April 5 1996]. There is little doubt that the company has the money and capacity to do so. The Indonesian government has also reportedly lately been "toying with merging Timah with troubled state-owned mining company, Bukit Asam" [Financial Times April 6 1999] Since its primary sales are made in dollars, Tambang Timah's profits have actually risen despite (rather, because of) the "Asian crisis" (up 102% in 1997) [Mining Journal May 22 1998, Jakarta Post March 11 1999].
Although the Indonesian government announced last year that more of Timah's shares would soon be privatised, the offloading of state assets seems to have lost momentum [Andrew Marshall "Indonesian privatisation losing its way" Reuters, August 18 1998]. Tambang Timah has also disputed the price demanded for a stake in KPC. The current asking figure has not been revealed, but KPC hung a US$176 million tag on the 23% initial offering [Jakarta Post April 19 1999], amidst accusations that it was deliberately set high, in order to deter Indonesian bids [Jakarta Post April 19 1999].