Malaysia Smelting Corporation will suspend mining and smelting operations at its majority-owned Indonesian tin unit to stem losses ahead of the expiry of a mining contract, Reuters reported. MSC’s decision to halt operations at PT Koba Tin precedes the expiry next March 31 of its mining contract, or contract of work (CoW) for the unit, which is 75% owned by MSC and 25% by Indonesia’s largest tin miner, PT Timah.
“Due to continuing losses at PT Koba Tin and having evaluated the available options, PT Koba Tin has decided to suspend its entire mining and smelting operations to minimize further losses pending the renewal of CoW,” MSC said in its third quarter results release on Tuesday.
In the September quarter Koba reported a loss of M$22.2 million (US$7.3 million) due to “very low production volume, high mine maintenance and rehabilitation costs and lower tin prices”. Its cumulative loss in the year to date amounted to M$118.8 million (US$39.0 million). MSC’s loss before unusual items in the first nine months amounted to M$65.3 million (US$21.4 million), with Koba’s problems partly offset by profits from its Malaysian smelter and mine.
PT Koba produced 6,332 tonnes of refined tin last year, but output has fallen by some 50% in 2012 as operations were rationalised. MSC has not been notified of any final decision on the extension of the CoW, although various government spokesmen have indicated that this is unlikely. Should a 10 year extension be granted, MSC has negotiated a deal to sell up to 60% of its stake to a local group Optima Synergy Resources Ltd.
