Emeco exits RI market
Wednesday, May 14 2014 - 02:50 AM WIB
ASX-listed Emeco Holdings Ltd, a provider of equipment solutions for the mining industry, said that it has decided to pull out from the Indonesian market due to expected poor earnings from the business over the long-term given the unfavorable conditions in the Indonesian mining industry.
?The dynamics of the Indonesian mining industry do not support us maintaining an ongoing presence in this market,? said Ken Lewsey, Managing Director of Emeco, in a statement issued Wednesday to announce the completion of Indonesian Strategic Review report.
The company decided to make an overall review of Indonesian operation in August of last year after its main customer, the troubled PT Indo Muro Kencana (IMK), the operator of Mt Muro Mine, was put on care and maintenance. IMK, the local subsidiary of ASX-listed Straits Resources Ltd, which has recently lodged bankruptcy petition for the local unit.
?Our strategic review considered a range of factors, including uncertainty of government policy for the mining industry, significant excess equipment in the market and the diminishing quality of the customer base. This has led us to conclude that utilization is likely to remain very low for an extended period.?
?Closing the Indonesian business removes an operation that has been loss making in recent years and releases capital which can be directed towards other opportunities in the future. This will also allow us to focus our time on driving improved utilization across our three core markets of Australia, Canada and Chile and also exploring broader strategic options for the Company,? Lewsey added.
Indonesia will be reported as a discontinued operation for the 12 months to 30 June 2014, the statement said.
Editing by Reiner Simanjuntak