Timah to produce tin derivatives to boost revenue

Alfian, The Jakarta Post, Jakarta | Wed, 11/26/2008 10:47 AM  

State mining company PT Timah, the world's second largest tin producer, may produce tin derivative products next year and sell them directly to industries, anticipating a continued drop in tin prices. 

"Anticipating low tin prices next year, we will sell our tin products to end-users instead of traders. We will also boost selling of derivative downstream value-added products like tin solders," said Timah Corporate Secretary Abrun Abubakar. 

Timah has begun to limit selling its basic product to traders since the last quarter of the year, he added. 

The price of tin has fallen nearly 50 percent so far this year from its historic price of more than US$25,000 per ton in May. 

Abrun said Timah has begun reducing its output this year, with tin production expected to reach 48,000 tons, lower than last year's output of 58,000 tons. 

"If the price stays like this, next year's output will likely be around the same." 

In a bid to help boost production of higher priced tin products, Timah will go ahead with construction of two downstream factories. 

Timah will complete building a tin solder factory in Kundur island, Riau Province, in December this year, he said. Timah plans to spend up to Rp 40 billion to build the factory with a production capacity of 2,100 tons of solder wires a year. 

Abrun added the company has just completed the design of a factory for tin chemical, which is used mostly in the plastics industry. 

"We will begin the construction of this factory next year and we expect to finish it within less than one year." 

The tin chemical factory is designed to have a 30,000 ton capacity, but in early phases of production, the company would only aim for 10,000 tons, he added. 

Timah has allocated about Rp 300 billion for this factory. 

Aside from constructing the two factories, the tin mining company will cancel other plans that have no direct relationship with its core business, including an earlier plan to acquire coal concessions. 

Abrun said this was the company's way of adjusting to the financial crisis. 

According to Timah's finance director Krishna Syarif, the company will carry over part of its planned Rp 1.4 trillion of capital expenditure from this year to next. local workers. (iwp)