Final audited results for 2012 announced by Malaysia Smelting Corporation on 29 April showed much larger losses than the unaudited figures released at the end of February, reflecting further provisions for the expiry of 75%-owned subsidiary PT Koba Tin’s Contract of Work in Indonesia on 31 March. The net loss is now stated as RM 172.3 million (US$56.6 million), compared to the previously reported RM 61.1 million (US$20.1 million), after allowing for further impairment of various asset values and provisions for employee benefits and mining cessation liabilities.
MSC had applied for a 10 year extension of the CoW (mining lease), but the Indonesian government is continuing its evaluation of the position and has only allowed a three-month temporary extension until it completes this. While Koba is permitted “to continue undertaking production operations”, production has actually been halted since last October given the uncertainty about the future of the company and its loss-making position prior to the halt.
Koba produced only 1,882 tonnes of refined tin in 2012, compared to an all-time peak in 2004 of 23,530 tonnes. If the CoW extension is eventually granted, MSC has arranged a deal with an Indonesian group to reduce its stake to a minority holding in future and there could be a substantial reversal of these latest provisions.
