Timah expects big losses next year<\/p>\n
by Dadan<\/p>\n
JAKARTA: Publicly listed tin producer PT Timah Tbk has
\npredicted a sharp decline in its net profit for this year and a
\npossible huge loss for next year, due to a combination of massive
\nillegal mining activity at its mining sites and low international
\nprice for the commodity.<\/p>\n
Timah president Erry Riyana Hardjapamekas predicted on
\nWednesday that net profit was likely to drop by 80 percent to Rp
\n64 billion (US$6.6 million) this year, compared to Rp 332 billion
\nlast year.<\/p>\n
He also cautioned on a possible huge loss of more than Rp 500
\nbillion in 2002.<\/p>\n
Timah said the 2001 net-profit forecast was based on sales of
\n43,216 tons of tin at an average price of $4,465 per ton, while
\nthe 2002 projection was based on 40,000 tons of tin sales at an
\naverage price of $4,000 per ton.<\/p>\n
The government owns 65 percent of Timah while the remaining 35
\npercent is held by public.<\/p>\n
"The reasons (behind the decline) are various, from an
\neconomic slowdown in industrialized countries to low prices of
\nmining commodities in the international market.<\/p>\n
"But rampant illegal mining and some dubious regional
\nregulations in Bangka and Belitung are mostly to blame," he said
\non the sidelines of the company's public expose on Wednesday.<\/p>\n
Erry said that illegal mining activity at the company's mines
\nsites could produce as much as 42,000 tons per year, which is
\nrelatively equal to the company's yearly production.<\/p>\n
"That huge number of production flooded the market, which
\ncertainly gave strong pressure to an already deteriorating
\nprice," he said, adding that the current price for tin metal in
\nthe international market was $3,630 per ton.<\/p>\n
"That was the lowest price in the last three decades."<\/p>\n
According to Erry, the Bangka regional administration proposed
\non August 23 a 20 percent tax on tin sales.<\/p>\n
The new regional autonomy law launched by the government two
\nyears ago allows provincial and regency administrations to manage
\ntheir own economic affairs.<\/p>\n
"But we're appealing against the (tax) decision," Erry said.<\/p>\n
"I recalled a clause of the regulation stating that we can
\nappeal against (any regional) decision to the government within
\n30 days of its announcement. So, what we're doing here is legal,"
\nhe said.<\/p>\n
When pressed to comment on what if the appeal was rejected by
\nthe government, he said that he would consider stopping all
\nmining operations and even closing down the company, including
\nfiring employees on the island.<\/p>\n
"That's the worst-case scenario we have so far," he said.<\/p>\n
Erry went on to say that there were over 5,000 illegal miners
\nin Bangka alone with a relatively low production cost.<\/p>\n
As an anticipatory move, the company is planning to ask a
\nshareholders' meeting to delay payment of its second dividend
\nfrom 2000 profits, which was due in December.(10)<\/p>",
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