Many mining firms qualified to float shares

JAKARTA (JP): Many local mineral resource-based companies are qualified to float their shares on the domestic stock market, analysts said.

Bahana Securities analyst Adriansyah Chaniago said yesterday that mining company shares could be more attractive than those of industrial companies.

He said unlike industrial and manufacturing companies, mining firms were relatively immune to the monetary crisis, which had caused over a 40 percent drop in the rupiah against the U.S. dollar since the turmoil hit the country early July.

"Most revenues of mining firms are generated in dollars while their costs are in rupiah. The rupiah depreciation has created a benefit for mining firms." he said.

I Ketut Wirabudi, also an analyst at the securities firm, said that the country's mineral firms should take advantage of the situation by listing their shares on stock exchanges.

Many mineral companies, such as PT Kaltim Prima Coal, PT Bukit Asam and PT Freeport Indonesia, would profit by floating their shares, he said.

There are four mineral-based companies now listed on the Jakarta and Surabaya stock exchanges: nickel mining company Inco, tin mining company Tambang Timah, gold and nickel mining company Aneka Tambang, and oil company Medco. Tambang Timah is also listed on the London stock exchange.

Both Adriansyah and Wirabudi, however, said that most local investors were not familiar with the companies' advantageous position because local stock exchange listing regulations had made it difficult to float their shares.

The Capital Market Supervisory Agency (Bapepam) had assigned the Surabaya Stock Exchange (SSE) to specialize in the mining sector, but it had not yet issued a special ruling to lure more mining firms to list their stocks in the exchange, Adriansyah said.

The requirement to post profits for the last three consecutive years had remained a major problem for mining companies.

"The Surabaya bourse should not impose such a listing requirement if it wants to attract mining companies," he said.

An official from the SSX, Ignatius Girendroheru, told The Jakarta Post yesterday the exchange was now working to change the regulation.

He said that the SSX still needed more specific regulations for listing mining firms because the industry was characterized by high uncertainty.

"Mining companies in Australia, for example, can list their shares in the ASX even though they have not recorded a profit yet," he said.

He said that the SSX had the opportunity to accommodate more mining companies in Indonesia because the country had vast mining resources.

Earlier reports said that the SSX had been working with foreign stock exchanges, including the Australian Stock Exchange and the Toronto and Alberta stock exchanges in Canada, to attract mining companies. (aly)