Timah quadruples 2004 profit on higher prices
Leony Aurora, The Jakarta Post, Jakarta
State-owned PT Timah, the world's largest integrated tin miner, more than quadrupled its profit in 2004 on higher tin prices and a weaker rupiah against the dollar.
Net income last year shot up to Rp 177.9 billion (US$18.92 million) from 2003's revised profit of Rp 36.5 billion, despite lower production volumes and sales, the Bangka-based company stated in a press release.
Tin prices last year averaged $8,842 per ton, 76 percent higher than the average price of $4,817 a ton in 2003.
Timah received Rp 2.8 trillion from the some 35,032 metric tons of tin it sold in 2004, up from the Rp 1.95 trillion it received from sales of 45,373 metric tons the previous year.
Nearly all of its output was exported, with only 5 percent of it being used for domestic consumption.
The company also benefited from the weakening rupiah against dollar -- the currency that it uses to conduct most transactions. The average dollar to rupiah exchange rate in 2004 stood at Rp 8,961 per dollar, slightly higher than the Rp 8,611 per dollar on average in 2003.
In this year's financial report, Timah revised 2003's performance after making adjustments to comply with the accounting standards required by the Labor Law (No. 13/2003), which regulates retirement and other post-work obligations.
Net profit in 2003 was revised downward from Rp 76.4 billion to Rp 36.5 billion.
Timah President Director Thobrani Alwi was quoted by Detik.com as saying that the company was targeting the production of 40,000 tons of tin this year.
In its statement, the company said that analysts had forecast that the price of tin would stay at between $8,000 and $9,000 per ton on supply concerns as demand was increasing while no new resources would come on stream in the near future.
At its peak, tin was being traded at $10,100 a ton in 2004.
The rise in tin prices has been triggered by the European Union (EU)'s decision to ban the use of lead for solders starting in 2006 due to environmental concerns. The United States and Japan were expected to follow suit.
Solders are expected to account for about 60 percent of global tin demand this year, with the remaining coming from food-can makers.
Timah operates tin mines on several islands in the country, including Bangka and Karimun, and in the coastal areas of Sumatra. Bangka has the world's largest tin deposits with some 420,000 tons of proven reserves, which it is estimated will last for the next 10 years.
As part of its plan to diversify its businesses, the company also plans to boost the coal production of its subsidiary PT Tanjung Alam Jaya to one million tons this year from an estimated 400,000 tons last year.
Timah is also considering acquiring asphalt producer PT Sarana Karya in Buton island, located off the coast of Southeast Sulawesi.