Timah to divest subsidiaries this year
Adianto P. Simamora, The Jakarta Post, Jakarta
Publicly listed state tin mining firm PT Timah said on Thursday that it would sell several subsidiaries this year in a bid to save the company from bankruptcy.
Timah president Erry Riyana Hardjapamekas said that the sale of the four subsidiaries -- tin mining firm PT Koba Tin, gold mining firm PT Kutaraja Tembaga Raya, insurance unit PT Asuransi Tugu Mandiri and Plimsoll -- was expected to raise some Rp 50 billion (about US$5 million) in cash to be used to help improve the company's cash flow.
"Our main priority now is to save the company from bankruptcy amid plunging tin prices," he told reporters after a hearing with House of Representatives Commission VIII for environmental, science and technology affairs.
The asset sales are part of the company's proposed rescue program, which must first be approved by the government, he said.
Timah has repeatedly blamed rampant illegal mining activities at its mining sites on Bangka and Belitung island for causing the plunge in tin prices as they produced nearly half of Timah's annual tin output of 40,000 tons.
According to Timah, there are 6,000 groups of illegal miners on the islands with a total output of 30,000 tons per year.
Erry told the House that another factor behind the drop in tin prices was the low demand amid the economic slowdown in industrial countries.
"Demand on the international market has been decreasing, while supply remains high," he said.
Since the middle of 2001, tin prices have fallen to $3,630 per ton, the lowest level in the last three decades.
Timah's cost of production, meanwhile, remained high at about $4,200 per ton, said Erry.
"We must reduce our production costs," he said.
Meanwhile, the director general of geology at the Ministry of Energy and Mineral Resources, Wimpy S. Tjetjep, said the government would soon revise Ministerial Decree No. 146/1999, which permits the export of tin concentrate.
"The new decree will aim at banning the export of tin concentrate, it is now in the hands of trade and industry minister Rini M. Soewandi," he told the House.
Illegal miners export their products in the form of tin concentrate.