Tambang Timah to focus on gold exploration, Erry says

JAKARTA (JP): Publicly listed tin mining firm PT Tambang Timah is to refocus its priorities to gold exploration to boost its performance, a company executive said here on Tuesday.

Company president Erry Riyana Hardjapamekas said that the company, which for years has relied on tin mining, should seek other mining opportunities to improve its finances.

"We have to focus more on gold exploration as there are no major developments in the tin mining business," he said, adding that the business expansion priority at present was to boost exploration in its existing gold mining concessions in Aceh and Tapanuli, both in northern Sumatra, and in West and East Kalimantan and East Java.

Erry said that the company held a total of 11 mining blocks covering 3,144,705.53 hectares.

The company's corporate secretary, Prasetyo, said that the company would allocate about Rp 60 billion (US$8.1 million) for gold mining explorations in 1999, a sharp increase on the Rp 16 billion budget for this year.

"Since we are going to focus on gold mining exploration, we will have to allocate a significant budget for next year," he said.

He said that Tambang Timah had received a contract of work (COW) from the government to explore for gold and other associated minerals in Aceh for 30 years.

He said the company had set up a joint venture firm, PT Kutaraja Tembaga Raya, in cooperation with Phelps Dodge Australasia Inc. of the United States.

He said Tambang Timah controlled a 25 percent stake in Kutaraja with Phelps Dodge Australasia holding the remaining stock.

Tambang Timah, which is listed on the London Stock Exchange, is one of the most efficient tin mining firms in the world.

It produced 42,620 metric tons of tin last year and 40,337 tons in 1996.

Erry said that Tambang Timah, which recorded a total net profit of Rp 305.7 billion in the first six months of this year, expected to a record net profit this year.

"We expect to more than double our net profit this year compared to last year," he said.

He did not mention any projected figure.

Tambang Timah recorded a total net profit of Rp 177.81 billion in 1997.

Erry said the significant increase in net profit was mainly caused by the rupiah's sharp depreciation against the American dollar.

"About 75 percent of our net profit is likely to be because of the rupiah's depreciation," he said.

The rupiah has strengthened to between Rp 7,500 and Rp 8,000 in the last few weeks on renewed confidence in the Indonesian economy.

The rupiah plunged to a low of Rp 17,000 to the dollar in early January from its pre-crisis level of 2,500 in August 1997.

Erry said the company had benefited significantly from the rupiah's sharp depreciation because the company generated most of its revenue in U.S.dollars.

"The rupiah's depreciation has meant a windfall profit for us," he said.

Tambang Timah, controlled by the government, is one of the 12 state companies set to be partially privatized this fiscal year. The government expects to raise US$1.5 billion in fresh funds from the privatization of the companies. (aly)