Government mulls merger of three mining firms

Urip Hudiono, The Jakarta Post, Jakarta

The government is considering a plan to merge three state-owned mining firms -- PT Aneka Tambang (Antam), PT Tambang Batubara Bukit Asam (PTBA) and PT Timah -- as part of efforts to improve their performance and to boost the country's overall state enterprises landscape, a minister said.

Speaking during a hearing with House of Representatives' Commission VII for mining, energy and mineral resources, State Minister for State Enterprises Sugiharto said on Thursday his office had assessed the three firms' financial performances and concluded that the performances were unsatisfactory, including their contributions to the state budget.

"It is also part of the government's strategy to revitalize state-owned enterprises (SOEs) by streamlining their numbers and consolidating their related businesses.

"We will soon propose and discuss the merger with the coordinating minister for the economy," he said.

Sugiharto said the managements of the three firms, in cooperation with independent consultants, had recently conducted studies that concluded in favor of a merger.

"The results of the studies showed that a merger would be feasible," he said. "It would be the best way to improve the performance of the three firms."

Sugiharto, however, said the time line for the merger was still undecided, pending approval from the related ministries -- the Office of the Coordinating Minister for the Economy, the Ministry of Energy and Mineral Resources and the Ministry of Finance -- and compliance with all market regulations.

"Because the three firms are also publicly listed companies, the merger must comply with related market regulations, including being approved through a shareholders meeting."

Once the merger is approved, Sugiharto said his office would conduct a due diligence of the companies, taking into consideration such aspects as the firms' legal status, fiscal condition and corporate culture to avoid any problems in their consolidation.

The government currently controls 65 percent of Antam, PTBA and Timah. It expects to collect some Rp 12 trillion (US$1.17 billion) in dividends from the companies this year.

While Antam's sales fell 2 percent to Rp 714.62 billion during the second quarter of the year, PTBA saw a 52 percent increase in its unaudited consolidated net profit to Rp 170.63 billion in the first half of the year.

Timah, meanwhile, booked a net profit of Rp 20.5 billion in the first quarter of 2005.

Antam's shares were unchanged at Rp 2,425 on Thursday, while PTBA's and Timah's slipped by 1.75 percent to Rp 1,680 and 1.14 percent to Rp 1,720, respectively.

The government issued a blueprint for the development of SOEs in February. The plan called for the number of SOEs to be reduced from 158 to between 100 and 120 through mergers and the establishment of holding companies for related firms.

Among the enterprises to be merged are 14 plantation companies (PT Perkebunan Nusantara numbers I to XIV), four port operators (PT Pelindo numbers I to IV), four airport operators (PT Angkasa Pura numbers I to IV) and four forestry firms (PT Inhutani numbers I to IV).