PT Tambang Timah stresses its interest in KPC shares
JAKARTA (JP): PT Tambang Timah is still interested in buying a 30 percent stake in the country's largest coal mining company, PT Kaltim Prima Coal (KPC), the tin mining company's top executive has said.
Timah's president Erry Riyana Hardjapamekas said the company was currently waiting for a decision from the government about the bid.
Timah offered to buy 23 percent of KPC's shares in 1998, but the tin mining company, which is currently 65 percent government- owned, later backed out of the deal following a disagreement on the share price.
Erry said the Ministry of Mines and Energy was currently negotiating with KPC's owners about the share price before offering them to prospective buyers.
"We hope the government can give us a way out so we can continue negotiating with KPC. Right now, we are waiting for the government's decision on the bid," he said.
He said earlier negotiations with KPC's owners stalled, because KPC considered Timah's bidding price was too low.
KPC valued its 23 percent stake at US$176 million.
Erry said the ministry had appointed a consultancy firm to work with appraisers hired by KPC to reach an agreement on a fair price for the coal company's shares.
KPC, equally owned by British companies British Petroleum and Rio Tinto, operates a coal mine in Sangatta, East Kalimantan. The company commenced commercial production in 1992.
KPC, the country's largest coal mining company with an annual output of 15 million tons, is required to divest up to 51 percent of its shares to the Indonesian government, individual Indonesian investors, or companies controlled by Indonesians between the fifth and 10th year of commercial production.
Last year, the ministry allowed the company to delay the mandatory divestment program by one year, after it failed to sell shares to PT Timah.
Under its contract of work, KPC must divest 30 percent of its shares by the end of this year.
"Negotiations (for KPC's shares) have to be started from the very beginning, because the shares offered are now 30 percent," Erry said.
Earlier this month, the government said KPC would be forced to offer shares on the Jakarta Stock Exchange next year, if it failed to find buyers for a direct private placement scheme.
The planned acquisitions are part of Timah's strategy to diversify its business into "mineral mining sectors other than tin". These sectors included gold, coal and diamonds, he said.
Erry said Tambang Timah had dropped a plan to buy a stake in PT Berau Coal, because of Berau's large outstanding foreign debt.
"We decided to put off the plan to acquire Berau Coal for now because the company, although it is technically sound, has huge foreign debts. But we may consider the acquisition again after or if the company restructured its debts."
Tambang Timah had been bidding for a 69 percent stake in Berau Coal as part of a plan to diversify its business.
Erry said the company was also conducting "greenfield explorations" for minerals other than tin, and had also established cooperation agreements with foreign companies to further its exploration activities.
Profit
Erry said Tambang Timah's net profit would be little changed in 1999, from Rp 518.83 billion (US$74.1 million) recorded last year.
He noted that tin prices had been steady over the first half of the year, while the rupiah's recent rise against the dollar would reduce the company's earnings from tin metal exports.
But the company would seek to offset the lower revenue resulting from the stronger rupiah by increasing operational efficiency, he said.
Erry said Timah would lower its tin output to approximately 40,000 metric tons, compared to over 43,000 tons in 1998, in order to cut the country's tin supply in an effort to lift prices.
He said that as a export-oriented firm, with over 75 percent of its output exported, the company enjoyed a windfall profit from the rupiah's sharp depreciation against the U.S dollar last year.
Timah reported a net profit of Rp 518.8 billion in 1998, a 200 percent increase from Rp 177.8 billion in 1997. Its net profit reached Rp 156 billion in the first quarter of this year, compared to Rp 126 billion in the corresponding period in 1997. (gis)