The Indonesian state-owned tin producer, , has released its 2017 results which reveal that tin-in-concentrate production from mining operations rose 29% to 31,178 tonnes, while refined tin production increased 27% year-on-year to 30,249 tonnes.

The increased output was the result of higher tin prices, a more aggressive ore buying strategy and increased capital investment. Capital expenditure increased 46% to 779 billion rupiah last year (~US$55 million), which included sustaining capex but also investments in exploration and expanding and improving production facilities and equipment.

In 2017, inventories of tin ore fell 56% year-on-year to 870 tonnes (tin contained) and of refined tin fell 19% to 2,791 tonnes, while tin content of slags rose by 18% to 10,241 tonnes. Last year was also significant for the company’s downstream operations, with tin solder production increasing 155% to 1,167 tonnes while the manufacture of tin chemicals rose by 174% year-on-year to 5,468 tonnes.

Despite a 31% increase in the cost of revenue to 7,692 billion rupiah (~US$540 million), due to the higher cost of tin ore, salaries and fuel, PT TIMAH reported a doubling of profits to 502 billion rupiah. This was explained by increased revenue due to higher tin prices and increased output.

Our View: The Company previously reported that it is targeting tin-in-concentrate production of 35,500 tonnes in 2018, up 14% from last year. Having exceeded its refined tin production target of for last year of 30,000 tonnes we believe its 2018 target is realistic, particularly as the company is partially justifying the increase based on capital investments in new capacity. This includes a new mine on Belitung Island and increased offshore mining in the Riau Islands Province.