Illegal tin mining hits Timah's finances

Illegal tin mining hits Timah's finances

The Jakarta Post, Jakarta

Widespread illegal tin mining in Bangka island has caused
state-owned tin miner PT Timah to suffer a potential loss of up
to US$ 26 million in the second half of this year.

Timah president Erry Riyana Hardjapamekas revealed in Jakarta
on Sunday evening that illegal tin mining had contributed to the
flooding of tin into the world market, and thus lowered tin
prices.

Consequently, tin prices in the world market had declined to
US$3,500 per ton now from over $5,000 last year.

Meanwhile, Timah corporate secretary Prasetyo B. Saksono said
on Monday that Timah's cost of production remained high, at
$4,300 per ton.

That made it impossible for PT Timah to operate normally, as
it had sustained a deficit of around $5 million per month since
July.

According to its unaudited financial report, Timah booked Rp
25 billion (about US$2.5 million) in net profit for the first
nine months of this year, 92 percent lower than the profit booked
in the same period of last year, which was Rp 296 billion.

This sharp decrease in net profit was recorded against the
backdrop of increasing tin production.

The company's refined tin output increased by nine percent to
27,900 tons in the first nine months of this year, and tin-in-
concentrate production was up by 20 percent to 34,384 tons.

Because of the deficit recorded since July, Prasetyo said PT
Timah had been forced to cut the workload of its workforce.

Of its 5,221 employees, 3,000 had to take alternate days off.
Worse still, about 1,440 dredger operators had to be sent home as
the company had halted the operation of uneconomical or high cost
dredgers and inland mining.

Timah has stopped the operation of 13 of the 20 dredgers it
normally uses.

The company, nevertheless, is still paying staff on the
payroll.

All this calamity started with the implementation of regional
autonomy law, which allowed the Bangka Belitung provincial
administration to license local companies to export tin.

This prompted illegal mining on Bangka island.

At present, there are 6,000 illegal mining operations,
involving 30,000 illegal miners, on Bangka. They have even mined
32 percent of Timah's former mines.

Nevertheless, Timah claimed that it had reached an agreement
with about 60 percent of those illegal miners to sell their tin
ore output to Timah.

It is part of Timah's strategy to prevent illegal tin from
entering the international market.

Another move was to spearhead the establishment of the "team
of eleven", comprising representatives from Timah, PT Koba Tin,
local administrations, the customs office, the police and local
legislative councils.

The team, tasked to solve the problems related to illegal tin
mining and trading, decided that no companies would be allowed to
export tin ore. This would serve as the first step in reducing
the problem of the illegal tin trade.