Three firms eye stakes in Antam

Three mining firms including Inco Ltd., Broken Hill Proprietary Co., and Glencore International AG are frontrunners to buy a stake in the state owned nickel and gold mining firm PT Aneka Tambang (Antam) when the government sells shares this year, according to analysts.

The government has recently said that it would further divest up to 14 percent of its ownership in the publicly listed Antam in October in a bid to help raise some Rp 6.5 trillion in privatization proceeds this year.

"There are one or two companies with deep pockets who may want to get in through the door and lay their hands on (Antam's) nickel deposits," said David Rubin, a minerals analyst at PT Nomura Indonesia.

The government now owns 65 percent of Antam.

Analysts said that the government many have to add incentives to the sale or cut the price to persuade mining companies to invest in Antam, which will still remain under government control.

"It's not quite attractive for a strategic investor to buy 14 percent in the company unless the government gives some control over the management," said Paul Dammkoehler, an analyst at brokerage PT Bahana Securities.

Without the management control, the government will be able to sell the stake only at steep discount.

Damkoehler expects global mining companies that have joint venture with Antam or already invested in nickel business in the country will emerge as the most likely buyers. (*)