Announcing its 2012 financial results today, Indonesia’s state-controlled tin producer PT Timah emphasised that its strategy is to focus on improving sales margins rather than volumes, which it hopes to achieve by pursuing value-added product sales, a reduced commitment to contract sales and increased direct business with end user customers.
Net profit in 2012 fell by 52% to Rp 431.6 billion (US$41.1 million), largely due to lower tin prices. Refined tin sales volume increased by 3% to 34,934 tonnes last year, but the average realised price dropped significantly from US$26,714/tonne in 2011 to $21,505/tonne last year. The rise in sales was achieved by running down stocks, as both mine and refined tin production declined, especially in the final quarter, when operations were being re-organised in line with new mining regulations. Production of refined metal fell by 23% to 29,512 tonnes, while mine production (including ore purchases from small mines operating on Timah’s leases) fell by 21% to 29,776 tonnes. One positive feature of the mine production figures was that offshore production rose slightly and accounted for 63% of the total.
Looking ahead at the current year and beyond, Timah is working towards making all its metal sales 99.9% quality or higher and investing in its dredging capacity. A first deep water bucket wheel dredge will be in operation this year, backed by 15 of its own small mobile cutter suction dredges plus another 30 rented from other companies. The company is also looking at investing in Burma, which is seen as having huge potential, but needs to conduct detailed exploration to confirm the scale of reserves.
The target for production and sales of tin in 2013 is 31,000 tonnes at a conservative assumed $21,500/tonne average price. However Timah notes that it expects to see a 5 – 6% rise in world tin consumption this year, while illegal mining in Indonesia will be constrained after June by new trade ministry export regulations.
