Timah plans to build smelter in Myanmar

State-run tin producer PT Timah is looking to expand its business to Myanmar, hoping to set up a smelter in the Indochina country to absorb raw ore.

Timah president director Sukrisno said the publicly listed miner was currently conducting a study of the plant that was expected to conclude by year-end. “We hope to start construction of the Myanmar smelter next year,” he said Thursday.

Sukrisno said that the smelter, which is estimated to require Rp 100 billion (US$8.3 million) in investment, would be built to tap into potential from the Myanmar market, as the country usually marketed the commodity raw.

The smelting facility would be part of Timah’s 10,000-hectare tin concession area in Pubyien-Tamok, Tanihary, Myanmar, that it acquired late in 2012. The area is estimated to produce 12,000 tons of tin per year and is expected to start commercial production early next year.

Timah started its exploration back in June, which it estimated would wrap up after six months.

Timah has set up two subsidiaries to support its Myanmar expansion — Timah Myanmar Mining to handle the company’s mining activities and Timah Myanmar to manage tin processing — in partnership with a local state-run company.

Timah has since 2012 set up $18 million for its Myanmar expansion, which will also include a proposal to operate 18 blocks with a total area of 180,000 hectares in the future, Sukrisno added.

Timah’s plans in Myanmar were part of efforts to increase the firm’s tin reserves, because its reserves from concessions on Bangka and Belitung islands have begun to reduce significantly.

Myanmar is now emerging as the new frontier in the tin industry, as Indonesia, the biggest shipper, seeks to restrict supply and boost prices, Bloomberg reported. Output in Myanmar is set to rise by 12 percent to 28,000 metric tons next year, supported by expansion from local firms.

Indonesia began banning raw-ore exports in January this year, unless firms built smelting facilities locally, in a move to boost the downstream industry and add value to the country’s commodities exports.

Timah, the country’s biggest tin miner, booked a 48-percent increase in its net profit, to Rp 203 billion in the first half of 2014, as the company took cost-efficiency measures and on the back of higher tin prices during the first half — which reached $23,000 per ton, before dropping in the subsequent months.

During the January-June period, the company booked Rp 2.75 trillion in revenue, a 7.7-percent increase compared to the same period last year. Timah also recorded a 41-percent increase in its production, to 14,352 tons from 10,187 tons year-on-year.

Timah withheld its sales in the first quarter of 2014 because the commodity’s price traded too low for its business, which soured its first-quarter performance. Tin was traded for between $21,000 and $22,000 per ton in the January-March period, while Timah wanted to sell its tin for at least $23,000 per ton.

Tin retreated 13 percent on the London Metal Exchange this year, Bloomberg data revealed, making it the biggest loser on the bourse, as supplies increased even after Indonesia tightened rules on exports. Tin prices currently hover at around $19,000 a ton.

Sukrisno hoped the commodity’s price would increase to $22,000 per ton in November with rising demand.

Shares of Timah, traded under the code TINS on the Indonesia Stock Exchange (IDX), slumped by 1.27 percent on a daily basis to Rp 1,165 apiece in Thursday’s trading.

Source: The Jakarta Post

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