Timah to resume offshore exploration

Encouraged by improving world tin prices, Indonesia's PT Tambang Timah will resume offshore tin exploration in the second half of the year after suspending exploration in late 2001, Dow Jones`reported.

Thobrani Alwi, Timah's president director, told Dow Jones Newswires in an interview late Monday that the company will conduct offshore exploration in Riau and Bangka waters, off the coast of Sumatra. The company's main operations are onshore mining sites on the islands of Bangka, Belitung and Singkep, all off Sumatra.

"We will resume exploration as tin prices are expected to rise," Thobrani said.

The world's largest tin producer holds exploration and mining rights until 2025 for more than 7,700 square kilometers spread across several islands and offshore areas in the Java Sea.

The company halted exploration after world tin prices hit historic lows in 2001, falling below US$4,000 a metric ton. That year, Timah's net profit fell 89 percent to 36.8 billion rupiah (US$1= Rp.8,890).

Illegal tin mining around the company's concession areas has added to Timah's problems by depressing the value of the commodity in regional markets. Asia's financial crisis of 1997-98 sparked a rise in illegal mining due to rising unemployment and a breakdown in law and order, the company says.

Timah recorded a net loss of IDR38.68 billion in the first nine-months of 2002, but is expected to make a profit for the full year due to a late recovery of global tin prices in the fourth quarter, which it expects to continue in 2003.

Tin prices could rise to between $4,300 and $4,500/ton this year due to firming demand, Thobrani said.

"In 2004, tin price could be above $5,000 a ton," he said. (*)