Tambang Timah forced to renegotiate supply
Tambang Timah forced to renegotiate supply
SINGAPORE (Dow Jones): Indonesia's PT Tambang Timah, the
world's largest tin producer, is forced to re-negotiate and
reduce contracted supplies to its customers as a result of the
company's decision to cut output by 5,000 metric tons in 2000,
Prasetyo, the company's corporate secretary told Dow Jones
Newswires Wednesday.
Tambang Timah expects tin output to decrease to 35,000 tons in
2000 from a total production of 40,000 tons in 1999.
When the company signed the 2000 contracts, the deals were
still based on the assumption that it would produce 40,000 tons
this year, Prasetyo said.
Because of the decision to reduce output, the company has to
"rationalize the commitments" to its buyers, he said.
He added that all the company's customers will be affected by
the decision, including those in Japan and South Korea, Tambang
Timah's biggest buyers, who account for 30 percent of its total
production.
"That's bad for all of us," he said, adding that Tambang Timah
used to "consistently" supply such big consumers with good
quality products.
He said that the decision would slightly damage customer
relations.
Tambang Timah won't extend contracts with two U.S. trading
houses whose existing contracts will end in June, he said, but
added that the amount involved "isn't that great."
Under such circumstances, the company's priority is to supply
endusers rather than traders, he said.
A trader with a large Japanese trading company in Tokyo said
his company has to suffer a 5 percent cut in monthly supplies
from Tambang Timah between June and December. The two parties had
previously signed an annual contract for 6,000 tons, he said.
The trading house will have to buy from China to make up for
the losses, he said.
Prasetyo said he isn't clear about the specifics of the supply
reduction for each customer.
Earlier this year, Tambang Timah decided to reduce its 2000
tin production partly because the company's first-quarter output
failed to meet its original target for the period, Prasetyo said.