Malaysia Smelting Corporation recorded a small pre-tax profit of RM8.7 million (US$1.8 million) in the first quarter, following the loss of RM35.1 million in the fourth quarter of last year. However continuing losses at its PT Koba Indonesian operations have largely offset profits made at its Malaysian smelting and mining operations. PT Koba Tin is 75% owned by MSC, although in March it announced that it had agreed to sell part of its stake to Optima Synergy Resources, a local investment group. The remaining 25% share is held by PT Timah.
In the first quarter a substantial increase in sales volumes from MSC’s Butterworth smelter resulted in a RM29.8 million pre-tax profit, while higher production by the company’s Rahman Hydraulic Tin mine contributed to a RM10.1 million profit there. Meanwhile Koba Tin reported a loss of RM27.9 million, with lower production levels resulting in higher unit costs. Koba Tin’s contract of work agreement is due to expire at the end of March next year, and part of the rationale for the agreement to bring in new local partners is to help secure a 10 year extension to 2023.
In a statement lodged with the Bursa Malaysia stock exchange, MSC said that: “Rationalisation activities to turnaround PT Koba Tin’s operations require a significant improvement in production and drastic cost cutting measures. However, results of any efforts to increase mine production will be subject to the renewal of PT Koba Tin’s contract of work with the government of Indonesia.”
