Govt mulls plan to merge Timah with Antam
The Jakarta Post, Jakarta
The government is considering merging the ailing state-owned tin mining company PT Timah and the relatively stronger general mining company PT Aneka Tambang (Antam) in a bid to help the former stay afloat, according to State Minister of State Enterprises Laksamana Sukardi.
Laksamana said on Tuesday that Timah has been badly hit by the plunge in world tin prices and rampant illegal mining activities at its sites on Bangka and Belitung islands.
"This (merger plan) is still being studied," he told reporters following a meeting with senior economic ministers.
"The merger is part of our efforts to restructure Timah's business," he added.
The statement dismissed earlier speculation that the tin miner might have to be closed down due to poor earnings prospects.
Tin prices have recently dropped to around US$3,800 per ton, while the ideal price range for Timah is $5,500-$6,000 per ton.
Timah has said that the widespread illegal mining activities at its sites have contributed to the plunge in tin prices. The company said that illegal mining could produce around 40,000 tons per year, which is roughly equal to the company's own production level.
Last week, Timah reported a 92 percent drop in net profits for the first nine months of 2001 to Rp 25 billion ($2.3 million).
Timah expected net profits to continue to fall, and might have to cut a massive number of employees next year.
Reports earlier said that Timah had temporarily halted the operation of 13 dredges as part of its cost-saving efforts.
Antam has strong gold and nickel mining operations.
Timah and Antam are both publicly-listed companies. The merger plan needs the approval of independent shareholders.
Timah's and Antam's management were not available for comment.
Meanwhile, an analyst at a securities firm said that Antam's financial condition would be badly affected if the company was merged with the weaker tin miner.
On Tuesday, Timah stocks soared 47 percent to close at Rp 515 per share on the news, while Antam shares ended 3.3 percent higher at Rp 775 per share despite the concerns.