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The Jakarta Post
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Timah gears up for cost cutting amid low tin prices

  • Raras Cahyafitri

    The Jakarta Post

Jakarta | Thu, November 22 2012 | 09:11 am

The world’s third-largest tin producer, PT Timah, will maintain its production level next year in response to declining prices, while focusing on reducing costs to maximize net profits.

“We don’t want higher production but lower profit. We want lower production but higher profit, which can be achieved through efficiency,” Timah president director Sukrisno said on Wednesday.

Sukrisno said that the company’s refined tin production next year would be at the same level of this year’s production estimated at up to 30,000 metric ton, 21 percent lower compared to 38,132 metric ton in 2011.

Up to the third quarter of the year, Timah produced 23,255 metric tons in refined tin, 18 percent lower compared to 28,532 metric tons in the same period last year. Meanwhile, sales volume reached 26,921 metric tons during the first nine months of the year, increasing by 7 percent compared to 25,266 metric tons in the same period last year.

Timah, along with other tin producers in the country halted last year’s tin exports in an attempt to intervene tin prices, which have been declined sharply as a consequence of the global economic slowdown affecting the world’s tin demand. However, the attempt only lasted a few months and failed to effectively lift the tin price, whose benchmark price is determined in the London Metal Exchange (LME).

During the first nine months of the year, Timah’s refined tin average selling price stood at US$21,523 per metric ton by the end of the third quarter of the year, 24 percent lower compared to $28,440 in the same period last year.

Sukrisno said that his company would also exercise cost cutting measures.

“We want to press down costs from between $16,000 and $18,000 per metric ton in average to below $15,000 next year,” he said.

The company is expecting to fully operate its modified dredging ship from Bucket Line Dredger to Bucket Wheel Dredge (BWD), which will be able to operate up to 70 meters in sea depth with lower cost of production and power consumption but higher productivity. The BWD is one of the company’s development projects. Timah will develop two more BWDs next year after it reviews the operation of the first BWD.

Timah is also planning to develop an industrial zone in Bangka Belitung, which will not only host a tin chemical processing facility, but also other industry including coal steamed power plant project.

“We will cooperate with state-owned PT Bukit Asam for the power plant project,” Sukrisno, who previously served as Bukit Asam’s president director, said.

Moreover, Timah is also planning to acquire new coal mining sites in South Kalimantan and South Sumatra with estimated funding of around Rp 500 billion. The company will also expand to Myanmar, which also has tin reserves.


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