Government mulls merger of three mining firms

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).