Timah plans to reduce output

Timah plans to reduce output

Bloomberg, London

PT Timah, the world's largest tin producer, plans to cut production equal to almost 3 percent of global output because of surging fuel costs and to shore up prices that are near their lowest in 22 months.

The company mines for tin on Bangka Island, Indonesia and also dredges ore from the seabed around the island.

Timah will decide whether to halt 13 of its 16 dredgers by the end of this quarter, Production Director Ari Fauzi said in an interview in London on Monday.

That would remove as much as 9,000 metric tons of production, from a world total of about 332,000 tons.

Tin, which is used in food cans and electronic equipment, has been the worst performing metal on the London Metal Exchange this year, losing almost 20 percent.

Exchange-monitored inventory of the metal has added 17 percent this year, suggesting supply from mines is exceeding demand.

"By the first quarter of next year the world will be short of tin," Fauzi said.

The dredgers may be withdrawn because a surge in fuel costs is making them unprofitable, he said.

Tin prices fell to US$6,060 a ton on Oct. 26, their lowest since December 2003.

Tin for delivery in three months was trading $50, or 0.8 percent, lower at $6,250 a ton as of 12:24 p.m. in London. Prices may reach $7,500 a ton this quarter and rise above $8,000 next year, Fauzi said.

Perth-based Bluestone Tin Ltd. closed its Renison Bell mine in Tasmania on Oct. 3 because of lower prices.