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January 29, 2009

Indonesia’s tin miner delays projects as investment continues
Indonesia's PT Timah Tbk plans to spend 700 billion rupiah ($62 million) this year to expand its tin chemical plant as well as buying more dredges for off-shore mining.

However, Timah, the world's largest integrated tin miner, has delayed some projects this year as demand for tin used in food packaging and soldering of electronic components has fallen, Reuters quoted the company’s director Wachid Usman as telling reporters on Wednesday.

"We continue some investment plans this year. But we have to delay other investment plans," Wachid said.

Last year, the company earmarked spending of 1.4 trillion rupiah.

For this year, the company plans to allocate spending to increase the capacity of its tin chemical plant which currently has a production capacity of 10,000 tonnes a year and had initial investment of 240 billion rupiah, he said.

"The plant will be expanded but we still have to see the market situation first," Wachid said without elaborating.

Timah has said it plans to boost output of higher value tin-based products to offset falling prices.

Tin prices at the London Metal Exchange have fallen around 55 percent from an all-time high of $25,500 a tonne hit in last May as the global economic crisis bites.

Tin MSN3 was last traded at $11,400 a tonne on Wednesday.

In 2008, Timah produced 49,029 tonnes of refined tin, down 16 percent from 58,325 tonnes in 2007 due to slow demand and competition for raw material with independent smelters.

"Tin collectors were back trading mining ores illegally. Consequently, the firm's production cost increased as we had extra cost for security and service costs to partners," Wachid said.

Timah's sales of refined tin fell 20 percent to 46,438 tonnes in 2008 from 57,897 tonnes in 2007.

This year, the company's tin production may be unchanged from 2008, Wachid said.

Timah posted revenue of 9.05 trillion rupiah last year, up 6 percent from 8.54 trillion in 2007. The company also booked net profit of 1.41 trillion rupiah, down 21 percent from 1.78 trillion rupiah in 2007.

The company is also sticking to plans to buy more dredges this year to boost off-shore mining. It plans to buy two big bucket-wheel dredges capable of digging down to 70 metre depths.

Currently, Timah sources 30 percent of its tin ore from off-shore mining, while the bulk comes from onshore mining.

Timah has also delayed a plan to acquire coal mines, Wachid.

The firm had said last May it planned to acquire three coal mines with total reserves of 50 million tonnes.

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