Source: The Jakarta Post
State-owned diversified miner PT Aneka Tambang (Antam) is set to quit the joint venture steel processing firm Meratus Jaya Iron & Steel, claiming the company had no future after it suffered consistent losses since its establishment with state-owned steel manufacturer PT Krakatau Steel.
Antam president director Arie Prabowo Ariotedjo said on Monday that Antam had to quit Meratus because the joint venture had incurred consistent losses since 2013. Meratus even had to halt its production in 2015.
"Because of the losses, our equity has declined to zero," he said after a meeting with the House of Representatives in Jakarta.
He added that Antam had Rp 170 billion (US$11.9 million) in equity plus a shareholder's loan of Rp 30.4 billion. Antam owned 34 percent of Meratus while Krakatau Steel owned the remaining 66 percent.
Both companies began investing in the Meratus project in 2008. The factory, which is located in Tanah Bumbu, West Kalimantan, began operations in 2012.
However, Arie said Meratus had faced several technical disadvantages in its operations – it was located too far from the mine site and to far from the sea, driving up logistics costs, while Krakatau Steel, the buyer of the products, preferred to import similar materials because of the lower prices of imported products.
"Technically, the company (Meratus) has no future. Our choices were to cut our losses or continue to incur losses," he said.