Fitch affirmed a BBB- rating on Minsur bonds, with a stable outlook. In a release Fitch noted the low costs of tin production in Peru, the group’s “historical track record of very low leverage” and management’s “aggressive plan to reduce costs and capex, responding swiftly to the low tin price environment”.
Group refined tin production is forecast to increase to some 27,500 tonnes in 2016, boosted by the expected completion of repairs to the hydro-power facilities serving the Pitinga mine in Brazil in H2, rising to closer to 30,000 tonnes in 2017. A US$25 million project to sort and process stockpiled low grade ore at the San Rafael mine, which could theoretically add another 3,000 tpy to production from the latter part of this year is not included in the base case production forecast, pending the completion of technical studies. Fitch’s base case assumes realized prices for tin at US$15,500/tonne on average in 2016 and US$16,500/tonne in 2017, allowing for an assumed $500/tonne premium for Minsur tin over the LME price.
Minsur’s management has responded very rapidly to the decline in tin prices and the hydro-power problems which emerged in Brazil last August. Other plans to boost production include the treatment of the large slag stockpile at its Pirapora smelter and (from H2 2018) a new tailings treatment project at San Rafael expected to produce 5,000 – 6,000 tpy.