Under the deal, the government will receive 13.5% of production revenue and BHP will manage and operate the three production areas covering a total 390,000 hetares in the provinces of Central Kalimantan and East Kalimantan.

Mines and energy minister Purnomo Yusgiantoro said Indonesian coal production was expected to drop to about 65 million tonnes in 2000 from 70Mt in 1999, Reuters reported.

“One of the reasons is the cut in production in Kaltim Prima,” he said.

“We will be working hard to increase output in 2001 and I am optimistic we can do that.”

Workers at PT Kaltim Prima Coal, jointly owned by Rio Tinto and BP Amoco, blockaded the mine site in July and then again in August, causing the company to declare force majeure twice.

Kaltim Prima said it the strife cost it 1.85 million tonnes in lost production with a sales value of US$50 million.