Timah to focus on offshore tin exploitation

State-owned PT Timah, the world's largest integrated tin miner, plans to concentrate its business in offshore tin exploitation, amid protracted disturbance at its inland mines from local administration and people, The Jakarta post reported.

The company said it had so far managed to discover at least 40,000 tons of tin reserves from offshore exploration activities.

Timah president Thobrani Alwi, said the company had been facing difficulties in setting up mining plans due to the uncertainties caused by unfavorable regulations issued by the local administration of Bangka Belitung and by rampant illegal tin mining.

"In the next couple of years, we plan to entirely focus on offshore mining activities in Riau islands province. Our inland operation will only become complementary," said Thobrani before a hearing with the House of Representatives Commission VIII on mining and energy on Tuesday.

Thobrani explained that since this year until the next two or three years, the company had planned for massive offshore exploration activities. The company had allocated some Rp 20 billion (US$2.2 million) this year and as much as Rp 30 billion next year.

The company plans to provide financing of around Rp 200 billion for exploitation activities.

Timah finance director Wachid Usman, said from the recent offshore exploration in Riau island province the company had managed to discover at least 40,000 tons of tin reserves, more or less equal to this year's tin production target.

"At present, our measured resources has reached about 340,000 tons, with some 220,000 tons located offshore and the remaining 120,000 tons on land. That is why we see offshore exploitation is more promising," said Wachid.

The company operates tin mines on several islands in the country, including Bangka and Karimun, and in coastal areas of Sumatra.

Timah has to lower its production output this year to about 40,000 tons from 45,906 tons last year, due to the lack of raw material caused by the widespread illegal tin mining in Bangka island. The activities have caused Timah to suffer a potential loss of up to Rp 500 billion since the Asian financial crisis in late 1997.

All this calamity started with the implementation of regional autonomy law, which allowed the Bangka Belitung provincial administration to license local companies to export tin. This prompted illegal mining on Bangka island.

Elsewhere, regarding problems with the company's tax arrears amounting about Rp 150 billion, Thobrani said the company would entirely lay the decision to the government.

Timah has to pay the arrears this year unless the government continues with its plan to sell 14 percent of its stake in the company via a secondary offering on the stock market. Timah's net profit for this year will be harmed if the government orders the company to pay the tax.(*)