PT Timah to cut 2002 tin output by 14% to 34,500 MT: Report
Tuesday, January 29 2002 - 11:00 AM WIB
"The plan to reduce the output is aimed at trying to help improve the global tin prices," Timah's Chief Executive Erry Riyana Hardjapamekas was quoted by the Newswires as saying.
Global tin prices, which recently hit historical lows, caused Timah's net profit to drop sharply during the first nine months of 2001 to Rp25 billion (US$=Rp10,315), down from Rp296 billion during the same period in 2000.
And analysts expect earnings to continue to slide this year if world tin prices keep falling.
The company's problems have been exacerbated by illegal mining, which is estimated to be equivalent to Timah's annual production of 35,000 tons. Falling tin reserves in Indonesia are also damping the company's prospects.
Illegal tin mining in Indonesia has affected the domestic and world tin markets as the influx of tin output from Indonesia has caused world tin prices to fall sharply, analyst and market participants said.
"Timah price currently stands at $3,500 per ton," Erry said, adding that the reduction in Timah's output will push up the tin price to an average of around $ 4,000/ton. He said at this price, the company would be able to survive.
He said the company has also reached agreement with around 4,000 illegal tin miners for the miners to sell their tin output to Tambang Timah.
Currently, there are around 6,000 illegal tin miners.
He said the agreement was made possible ahead of the government's plan to issue a regulation on the export and domestic trade of tin ores and coal, which will curb illegal mining.
Under the planned regulation, tin ores will be placed on the controlled commodities list. Exports of controlled commodities aren't allowed without any verification that the commodities are from legal sources.
"This, I expect, will help improve the tin prices," he added. (*)