Krakatau Steel delays privatization schedule
JAKARTA (JP): The state-owned steel manufacturer PT Krakatau Steel announced on Monday that plans for its privatization have been delayed until the year 2000 due to weak international steel prices.
Company president Sutrisno said international steel prices had plunged to a record low of US$200 per ton from between $310-$370 per ton early last year due to weak demand in the wake of declining global economic growth.
"We will sell the shares when steel prices are strong," he told reporters at a breakfast gathering.
He said steel prices had now bottomed out and were expected to increase in the middle of next year.
Krakatau Steel was among 12 state-owned companies which were to have been privatized in the current fiscal year.
A sluggish capital market has forced the government to cut privatizations in the 1998/1999 fiscal year to 10 companies.
In addition to Krakatau Steel, the government has also postponed plans to privatize domestic telecommunications provider PT Telkom.
State Minister of the Empowerment of State Enterprises Tanri Abeng was lambasted by the press in June when he quietly drafted a memorandum of understanding (MOU) promising to sell 49 percent of Krakatau Steel to the Dutch company Ispat International for the relatively cheap price of $400 million.
Tanri claimed that no underhand deals were involved and said the memorandum was the initial step in an otherwise transparent privatization process.
Sutrisno explained that Krakatau Steel has been increasing its exports to Europe and the United States since early this year due to sluggish domestic demand.
He added that the company would try to maintain its traditional Southeast Asian export market, despite the economic crisis that has plagued the region since the middle of last year.
Krakatau Steel, with an annual production of three million tons, exported a total of 100,000 tons of steel to Europe and 70,000 tons to the U.S. in the first half of this year, he said.
He also said the company booked a gross profit of Rp 400 billion ($53.3 million) in the first half of this year.
Pre-marketing
Separately, Sofyan Djalil, deputy for communications at the office of the State Minister of the Empowerment of State Enterprises, said that pre-marketing of state-owned tin mining company PT Tambang Timah, gold and nickel mining company PT Aneka Tambang and plantation company PT Perkebunan IV would start early next month.
He said detailed information about the three companies, including the size of stake available to strategic investors is being prepared by the government's financial advisors and should be complete by the end of this month.
Morgan Stanley and Paribas have been appointed as the financial advisors for Tambang Timah and Aneka Tambang, and Jardine Fleming is looking after the affairs of Perkebunan IV.
"Investors interested in the companies can make their bidding prices based on the information we are preparing," Sofyan told reporters on the sidelines of a seminar on Monday.
Pre-marketing of the three state firms will follow a similar process begun late last month for the state-owned international call operator PT Indosat.
PT Indosat will become the second state firm to be privatized this fiscal year after state-owned cement maker PT Semen Gresik, in which a 14 percent stake was sold to Mexico's Cemex SA de CV late last month. (rei)