Timah posts Rp 53.8b loss in first semester

The Jakarta Post, Jakarta

State mining company PT Timah Tbk. posted a Rp 53.8 billion (US$5.9 million) net loss in the first half of the year, compared to the Rp 126.2 billion profit in the corresponding period of last year.

"This is the first time that the company posted a loss since 1992 when the world experienced similar tin crisis," the company said in a statement.

The company attributed the loss, in general, to the depressed tin market coupled with the residual impact of the so-called unconventional mining, and the weakening of the U.S. dollar against the rupiah during the second quarter of the year.

The average price for tin produced by Timah fell 19 percent to $4,116 per metric ton in the first half of the year from $5,078 a year earlier.

Owing to cutting cost measures, production cost dropped 21.11 percent to Rp 690.1 billion, from Rp 874.7 billion in the first half of 2001.

However, the final cost per ton rose 28 percent to $4,285 from $3,355 per ton due to lower sales volume.

In terms of demand, the slow economic growth in the western world, particularly Europe and the USA, had depressed global demand for tin.

Timah's sales volume for the first half of the year declined 15 percent to 13,933 tons.

The rupiah strengthened to Rp 8,730 per dollar from Rp 10,579 a year before.

Timah, which was for many years considered a model state-owned enterprise, thanks to its efficiency and profitability, started facing financial problems several years ago following the widespread of illegal mining activities at its operation areas in the Bangka and Belitung islands.

The massive exports of tin ore by the illegal miners had caused an oversupply on the international market and depressed the price for the commodity.

The government only stepped in to help solve the problem in March this year, by issuing a decree to ban tin exports by unlicensed exporters. The decree sought to stop illegal miners who have no license from continuing their activities.