Timah's net profit drops 89%
The Jakarta Post, Jakarta
Troubled state-owned tin-mining company PT Timah Tbk announced on Thursday an 89 percent fall in net profit for 2001, citing plunging tin prices and rampant illegal mining.
Timah, the world's largest integrated tin-mining company, said in a statement that last year's net profit dropped to Rp 36.78 billion ($3.61 million).
The company also reported a lower gross profit, Rp 412.96 billion in 2001, compared to Rp 624.32 billion the year before.
Revenue increased to Rp 1.87 trillion from Rp 1.64 trillion in 2000.
Once considered the country's best-managed state company, Timah started plunging into financial troubles last year, following the drop in tin prices caused by the oversupply of tin on the world market.
The oversupply was blamed on widespread illegal tin-mining around its operation on the islands of Bangka and Belitung.
Last year, the company repeatedly called on the government to crack down on illegal miners, warning that it might close all its inland tin-mining activities and lay off over 70 percent of its workforce due to the slump in revenue.
But the local government, which allowed and collected revenues from illegal miners, refused to heed the call.
The central government made no response until early this month, when the Ministry of Industry and Trade issued a ruling banning tin-mining and exports conducted by unlicensed operators.
Under Decree No. 57/2002, tin is now considered a strategic commodity and its trade must be supervised by the central government.
Timah is 65-percent owned by the government, while Indonesia is the world's second largest tin producer after China.
Timah's exports to Asia account for 46 percent of the company's total sales. A total of 39 percent goes to Europe, and a further 10 percent to the U.S. The remaining five percent is sold locally.
Timah said it received an average price of $4,408 per metric ton of tin last year compared with $5,520 per metric ton in 2000.
The company announced that during the next six months, it would restructure its business as part of cost-cutting measures.
This will include relocating some business centers, divesting redundant assets and reducing equity participation in unprofitable or unsuitable affiliates, and restructuring units to improve efficiency and cut costs.
Timah previously targeted four units for possible sale: tin- mining company PT Koba Tin, gold-mining firm PT Kutaraja Tembaga Raya and insurance company PT Asuransi Tugu Mandiri.
The company's stock fell 6.3 percent, or Rp 50, to Rp 750 on Thursday.