Timah to divest subsidiaries this year
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.