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tate-owned tin producer PT Timah (Persero) reported lower net profits last year due to lower shipments, lower prices and higher tax payments.

The company’s net profits stood at Rp 896.78 billion (US$97 million) in 2011, a 5.39 percent decline from Rp 947.94 billion in 2010.

“The lower net profit is basically due to the instability of tin prices, which occurred in the second half of 2011, resulting in a decline in sales volumes. The lower sales were caused by a moratorium of refined tin exports from Bangka Belitung,” Timah said in a written statement.

Indonesian tin producers agreed to halt export of refined tin in October 2011 to stabilize tin prices in the world market, which plunged sharply due to the financial crisis in the US and Europe. The moratorium was carried out when tin prices dropped to below $19,000 per metric ton, which was lower than production costs. During the moratorium, Timah stopped all spot sales but kept contract sales intact.

The company sold 33,971 metric tons of refined tin in 2011, a 16 percent drop from 40,507 metric tons in 2010. The refined tin production stood at 38,132 metric tons, 6 percent lower compared to 40,412 metric tons in 2010.

“The decline in refined tin production volumes corresponded to lower sales volumes in the second semester,” the company said.

Timah sold refined tin at $26,714 per metric ton on average in 2011, which represented a 33 percent increase from $19,981 in 2010. The tin price fluctuated between $33,255 per metric ton and $18,610 per metric ton during the year.

Timah reaped Rp 8.75 trillion (US$953 million) in revenue in 2011, increasing by 4.92 percent from Rp 8.34 trillion a year earlier.

Although the company’s gross profit stood at Rp 1.97 trillion in 2011, a 3 percent increase from Rp 1.92 trillion in 2010, net profits dropped 5.39 percent to Rp 896.78 billion in 2011 due to higher tax payments that rose 41 percent to Rp 371.28 billion in 2011 from Rp 179.37 billion in 2010.

The company is expecting that its revenue will grow 15 percent this year, within the estimated 5 to 6 percent increase in global tin consumption.

The company will also see lower refined tin production due to the implementation of the coal and mining law, which will prohibit raw material exports. Anticipating a possible instability in tin prices and an implementation of a ban on the export of raw material products, the company said that it would focus on pushing sales of value-added products, reduce contract sales and concentrate its marketing efforts on the end user customer.

“The product type categorized as a value-added product is refined tin that has an Sn [stannum] content of 99.90 percent to 99.99 percent. We target value added product sales at 70 percent from total sales,” the company said.

“This strategic plan will also be supported by efforts to increase offshore production,” it added.