Timah hopes to buy coal company this year
Thursday, January 4 2001 - 04:30 AM WIB
Publicly listed tin mining company PT Tambang Timah) expects to acquire a local coal mining company this year to diversify its revenue sources, its President Director Erry Riyana Hardjapamekas said Wednesday.
"A due diligence on the coal company is being conducted," Erry told Dow Jones Newswires.
He declined to name the coal company or the amount of money it will spend to acquire it.
"(But) the amount will be significant," he said.
Timah in 1999 dropped a plan to buy a stake in PT Kaltim Prima Coal over a disagreement with the shareholders of the country's largest coal producer on the price of the stake.
Erry said Timah chose to resort to acquisitions of existing gold and coal companies after it halted all green-grass explorations in early 1998 because of rising social unrest in the country.
Timah decided to diversify mining to other commodities because its tin reserves in Bangka and Belitung islands are dwindling, while no new tin reserve was discovered.
To Cut Tin Output Amid Flat Tin Price
Erry stated the company will cut tin output to 35,000 metric tons this year from 36,000 tons last year given the flat international price for tin.
He, however, expects that the rupiah's weakness against the dollar will boost its net profit in rupiah terms because it exports tin.
Erry expects the price for tin to be flat this year at around $5,300 per ton.
Many analysts have expressed concern over Timah's future earnings given the slow progress in diversification into non-tin metal mining.
"Timah must find another tin reserve and/or non-tin metal revenue sources to replace its current dwindling tin reserves," said Rachman Koeswanto, a mining analyst at BNP Paribas Peregrine.
Timah tin reserves will last for 10 years if it maintains production at 36,000 tons per year.(*)