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tate-owned tin producer PT Timah, one of the world’s largest tin miners, has decided not to increase production next year, a business move up to prop prices which have been under pressure since last year.

Timah president director Sukrisno, who assumed the top position seven months ago after previously serving as president director of state-owned coal miner PT Bukit Asam, said by keeping 2013 production at this year’s level, tin oversupply in the world market will be reduced, which could in turn prop up the price. Sukrisno recently spoke with The Jakarta Post’s Raras Cahyafitri about Timah’s business policy under his leadership. Below are excerpts from the interview.

Question: As the new president of PT Timah, what are your main priorities in managing the company?

Answer: We have to continue the previous’ management policies, yet need to perfect and fix those policies to keep going forward. Our first priority now is how to improve environmental consciousness, not only within the company, but also in the Bangka communities, which have been involved in tin mining for many years. The local residents should protect the environment and help reclamation projects, not get involved in illegal mining.

Residents around mining areas think they will not earn a living if they don’t mine tin. We are trying to persuade them to move to do other things. I maintain my commitment to the local administration but I’m asking for a little change

The second policy is a change in the mining process. Previously, we focused on high grade ore, with a content of at least 70 percent tin. Now, we are shifting to lower grade ore, at 20 to 30 percent. By focusing on lower grades, we will be able to extract additional minerals such as zirconium, which could bring additional revenue to the company.

The company four basic activities: tin mining, mining other commodities including coal and nickel, downstream products like solder and chemicals, and other businesses including hospitals. We already own a hospital, so why not develop it into an international-level hospital to serve wider society? We might also get into the hotel and property business.

We are looking at developing an industrial zone in Tanjung Ular, West Bangka. PT Bukit Asam is going to build a power plant there. The industrial zone should change the residents’ narrow focus from mining to industry.

Tin is a limited natural resource. Our policy is that ‘tin can be depleted but Timah will persist’. We have to develop businesses outside tin production. The fourth business strand may contribute only a small amount to the company today, but we have to start preparations for tomorrow. When the tin mining declines, other businesses should gradually replace them as contributors to the company’s earnings. This is quite important for employees. Developing the fourth strand is the long-term plan.

In previous years, PT Timah always increased its annual production. But, next year, you decided to maintain production at this year’s level of about 30,000 tons, why?

This is an experiment. We will do that in 2013 and see what the global situation is in 2014, whether prices will keep declining. Let’s see the impact of low production on our buyers. Let’s see
whether we want to boost production after 2013, because we will be opening tin mines in Myanmar.

Can you tell us about the Myanmar plan?

Myanmar expansion is part of a plan to anticipate the depletion of tin reserves in Bangka and Belitung islands. We need a careful assessment of the tin mining in Myanmar. We have to decide whether we will just be mining or building a smelting plant. We have no financial difficulties in the Myanmar project. I am sure, when we have reliable data on tin reserves, many financial institutions will be ready to provide funds.

How about the expansion plan?

Expansion will continue even without increasing production next year. The question now is which projects are our main priorities, for example, the development of Bucket Wheel Dredge [BWD], a large dredging ship with the latest technology. When the management came up with a plan to build new BWD to improve mining in deep water, I said, ‘Hold on. Is it better to build a new one or modify the existing ship?’ Many things should be considered — the size of investment, production capacity, the lifetime of the ship. If the existing tin deposits will be exhausted in 25 years, we don’t need a ship with a life of 30 years. If we modify an existing ship into a BWD, we save up to US$250 million for each ship. With this reasoning, we decided to modify existing ships.