Timah suffers from falling commodity price
Monday, October 31 2005 - 01:30 AM WIB
The Indonesian tin price has declined since August of this year from US$10,000 per ton to $6,450 per ton on Oct. 30. In comparison, state tin miner PT Timah's production cost is around $6,000 per ton.
"The profit (from tin mining operation) is now shrinking. This shows that tin price is now at critical level," Aburizal said during the inauguration ceremony of Timah's new smelter facility in Kundur, Tanjung Balai Karimun regency, Riau Islands province, on Sunday.
Aburizal said that to help reverse the situation, Indonesia, which exports around 100,000 tons per year of tin, which accounts 35 percent of annual global consumption of 260,000, must hold talks with other major tin producer Malaysia. At home, the central government would also talk with local administration to curb illegal tin mining activities and control the issuance of local permit for new tin smelter facilities.
Timah president Thobrani Alwi acknowledged that the current tin price crisis was contributed by the surge in the number of new smelter facilities, made possible as several local administrations issued new permits in 2004. He pointed out that there were now 20 new smelter facilities licensed by local governments.
Thobrani said that these smelter facilities exported between 4,000-5,000 tons of non-brand tin into the international market each month, which makes the price cheaper.
He said that the government must take measures to resolve the problem among others by controlling the new smelters such by imposing similar treatment like by requiring them to pay mining royalti, tax and dividend to the government as being imposed on PT Timah.
He said that by regulating the tin production sector, Indonesia could control tin price in the international market because of the country's huge export volume. He pointed out that Timah alone could produce some 50,000 tons per year.(*)