Timah looks to 78% coal output rise

PT Timah, the world?s largest tin miner and refiner, may increase coal production by 78 percent this year to tap rising demand and counter falling tin prices, a company official said. The Jakarta Post reported on Friday.

The company plans to mine 1.6 million metric tons of thermal coal, burned by electricity generators, up from about 900,000 tons last year, said Lily Harlina, head of marketing at PT Timah Investasi Mineral, the tin producer?s coal mining and trading arm.

?We?re boosting coal output because the price outlook is better than that for tin,? Harlina said in an interview Wednesday at the Asian Coal Outlook 2006 conference in Singapore. ?It?s also because we are getting orders from buyers in Japan, Korea, and Europe.?

Timah and rivals such as PT Bumi Resources, Indonesia?s biggest coal miner, are benefiting from rising coal prices, prompted by higher demand in China, the world?s largest producer and consumer of the fuel.

The company last year secured contracts to sell 300,000 tons of thermal coal to each of Japan?s Mitsubishi Corp. and South Korea?s LG Metals. It exported 80 percent of the coal produced last year, Harlina said.

?We?re in negotiations right now with buyers from Japan, South Korea, Malaysia and others,? Harlina said. ?We sold coal at $43 a ton in December and we expect prices at the same level this year because it would be difficult for us if prices fall, given the export tax imposed on coal.?

The Indonesian government imposed a 5 percent tax on coal exports to ensure the fuel is available to domestic businesses, Trade Minister Marl Pangestu said Jan. 17. The base price used to calculate the tax is set at $30 a ton and will be reviewed eveiy month.

Timah bought PT Tanjung Alam Jaya, its first coal mine, in 2003 to boost profit as output slowed at its main tin business. Tanjung operates a 9,720 hectare mine in South Kalimantan, with a mineable reserve of about 10 million tons.

The company last year bought a neighboring mine, enlarging the site to 11,000 hectares, Harlina said. Timah and Timah Investasi own equal shares in Tanjung Alam.

?We missed our output target of 1 million tons last year because of problems in getting heavy equipment,? Harlina said. ?The situation has improved since late last year, so we expect we can raise output.?

The company plans to buy two coal-mining companies in a bid to diversify as tin reserves decline, president director Thobrani Aiwi said on May. 19. (*)