The government said on Wednesday that it would only demand dividends of about 35 percent from the three state-owned mining companies this year to give the firms more money to invest in their businesses.
The companies, two of which saw profits tumble in 2009 due to falling global commodity prices, usually pay about half of their profits in dividends.
“We see the mining industry as ripe for capital injection, so we plan to reduce dividends from mining SOEs to 35 percent this year,” State-Owned Enterprises Minister Mustafa Abubakar said.
The government owns majority stakes in the three listed companies - coal miner PT Tambang Batubara Bukit Asam, gold and copper miner PT Aneka Tambang (Antam) and tin miner PT Timah. The government’s decision will affect smaller shareholders in the companies, who will also receive lower dividends.
Mustafa said the government hoped the mining companies would be able to take advantage of the additional funds to spend on capital projects.
Both Antam and Timah saw their profits drop sharply in 2009. Antam’s net profit plunged 59 percent to Rp 559 billion ($60.9 million), while Timah’s net profit tumbled by 42 percent to Rp 42 billion.
Bukit Asam posted a 60 percent increase in net profit to Rp 2.71 trillion, thanks to strong coal prices, but it needs the additional funds for a major planned expansion of its port and rail facilities.
Antam and Timah also have capital expenditure planned this year. Antam will set up a new gold mine at its concession in Papua. Timah is planning to construct a factory in Cilegon to produce chemicals used to process tin.
Norico Gaman, head of research at PT BNI Securities, said the move would be positive for the mining companies and was likely to boost the their share prices over the long term.
However, in the short term, shareholders would be disappointed by the lower dividends, he said. “Public shareholders will see it as negative because their dividends will be decreased,” Norico said.
Mustafa said the lower government income resulting from the reduced dividends would be offset by the strong performances expected from other SOEs, particularly in the banking sector.
Norico said the government could make up for the lower dividends by raising the dividends required from other state-owned enterprises which hadn’t been hit by the global economic slowdown as much.
“The government could take a fair amount of dividends from PT Pertamina, and state-owned banking and infrastructure companies,” he said.
The announcement did not have much impact on the companies’ share prices. Bukit Asam’s shares gained Rp 100 to close at Rp 16,100. Antam and Timah closed unchanged at Rp 2,150 and Rp 2,250, respectively.
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