Increase in fuel price seriously affects PT Timah's operation

The government's decision to increase the price of diesel fuel to certain industries including mining companies will seriously affect the operational cost of the state owned tin mining company PT Timah, Kompas reported on Wednesday.

The company's corporate secretary Prasetyo said that the increase in the fuel price would cause an increase in the company's operational cost by about Rp 15 billion during the first semester.

He said the severe impact of the rise in the fuel price to the tin company's operation would occur in the second semester. "But we don't know yet how serious it will affect the financial performance," he added.

Securities analyst Deni Hamzah said that the rise in the price of the fuel price and the decline in the price of tin metal seriously affect the financial performance of PT Timah this year.

"About 60 percent of PT Timah's operating cost come from the fuel use," Deni said. The increase in the fuel cost would bring additional pressure to the state tin mining company in curbing the impact of the falling tin price, he added.

In the last few months the tin price had dropped to US$7,070 per ton from about US$7,800 per ton in the first months of this year. Although there is an increase in the tin price to US$7,325 per ton in recent weeks, the world's tin price is still fluctuating due to an oversupply in the world's market.

The Indonesian tin production is estimated to reach 65,000 tons this year but analysts believe that the production would exceed 80,000 tons due to an increase in the production of illegal tin miners. (*)