Antam agrees to supply handcraft producers

State owned mining company PT Aneka Tambang (Antam) will supply six tons of silver a year to handcraft producers in Celuk, Bali and in Kota Gede, Yogyakarta, who often fail to meet their export commitment due to uncertainty in the supply of raw materials, Bisnis Indonesia reported on Friday.

Antam?s director for operation, Harsojo Dihardjo, said in Jakarta on Wednesday that the contract agreement had been signed but the handcraft producers had yet used the contract due to the imposition of the 10 percent value added tax (VAT).

The handcraft producers were still reluctant to buy the silver from Antam because, with the 10 percent VAT, the price of the silver sold by Antam would be higher than those sold in the market, Harsojo added.

The silver handcraft producers in Bali and Yogyakarta bought at least 600 kg of silver a month from Antam during the period of between January and August, 2001, but the purchase was then stopped after the government imposed 10 percent VAT. However, buying the raw material from market often caused a problem to the handcraft producers. Besides the low quality of the silver they bought, the prices were often too fluctuative.

Antam normally sells its silver at prices on the London Metal Exchange (LME), with a premium of between 10 and 20 US cent. For the handcraft producers, the premium is set only at 1/3 of the normal level. For silver purification services, the handcraft producers only pay 1/3 of the normal fee of between US$8 and US$10 per kg. (*)