Malaysia Smelting Corporation reported a pre-tax loss of RM 75.0 million (US$24.2 million) in the second quarter, mainly due to problems at its 75% owned Indonesian subsidiary PT Koba Tin. Koba made a loss of RM 68.9 million in the quarter and cut production by 50% as high cost units ceased operation. The group’s Butterworth smelter in Malaysia also recorded a small loss of RM 9.6 million, as volumes dropped and low-grade slags were processed. The loss at the smelter was mainly accounted for by a write down on tin stocks to reflect lower prices and a foreign exchange loss. Tin mining at Rahman Hydraulic Tin remained profitable as the mine expanded production, although margins were reduced by lower prices. RHT recorded a Q2 pre-tax profit of RM5.9 million.
In the first half of the year MSC recorded a loss of RM 66.3 million (US$21.4 million), compared with a profit of RM99.2 million in the first half of 2011. The results were mainly due to the problems at Koba, which lost RM97.0 million while both the Malaysian operations were in the black.
Commenting on the prospects for the rest of the year MSC said “The short term outlook for tin and other commodities is not encouraging due to slower demand in China and other industrial countries compounded by the economic recession in Europe …… PT Koba Tin is evaluating various options to minimize its losses and will implement remedial measures in the current third quarter”. However it noted that a return to profitability depended on an improvement in tin prices and the renewal of Koba’s Contract of Work, which is due to expire next March.
