Timah to focus on offshore tin exploitation

Timah to focus on offshore tin exploitation

Rendi A. Witular, Jakarta

State-owned PT Timah, the world's largest integrated tin
miner, plans to concentrate its business in offshore tin
exploitation, amid protracted disturbance at its inland mines
from local administration and people.

The company said it had so far managed to discover at least
40,000 tons of tin reserves from offshore exploration activities.

Timah president Thobrani Alwi, said the company had been
facing difficulties in setting up mining plans due to the
uncertainties caused by unfavorable regulations issued by the
local administration of Bangka Belitung and by rampant illegal
tin mining.

"In the next couple of years, we plan to entirely focus on
offshore mining activities in Riau islands province. Our inland
operation will only become complementary," said Thobrani before a
hearing with the House of Representatives Commission VIII on
mining and energy on Tuesday.

Thobrani explained that since this year until the next two or
three years, the company had planned for massive offshore
exploration activities. The company had allocated some Rp 20
billion (US$2.2 million) this year and as much as Rp 30 billion
next year.

The company plans to provide financing of around Rp 200
billion for exploitation activities.

Timah finance director Wachid Usman, said from the recent
offshore exploration in Riau island province the company had
managed to discover at least 40,000 tons of tin reserves, more or
less equal to this year's tin production target.

"At present, our measured resources has reached about 340,000
tons, with some 220,000 tons located offshore and the remaining
120,000 tons on land. That is why we see offshore exploitation is
more promising," said Wachid.

The company operates tin mines on several islands in the
country, including Bangka and Karimun, and in coastal areas of
Sumatra.

Timah has to lower its production output this year to about
40,000 tons from 45,906 tons last year, due to the lack of raw
material caused by the widespread illegal tin mining in Bangka
island. The activities have caused Timah to suffer a potential
loss of up to Rp 500 billion since the Asian financial crisis in
late 1997.

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.

Timah shares ended lower by Rp 75 to Rp 2,125 on the Jakarta
Stock Exchange on Tuesday.

Elsewhere, regarding problems with the company's tax arrears
amounting about Rp 150 billion, Thobrani said the company would
entirely lay the decision to the government.

Timah has to pay the arrears this year unless the government
continues with its plan to sell 14 percent of its stake in the
company via a secondary offering on the stock market. Timah's net
profit for this year will be harmed if the government orders the
company to pay the tax.

Eyebox
Timah to sign contract with Mitsubishi, Daewoo

Tin producer PT Timah plans to sign a contract with Japanese
giant Mitsubishi Corp. to export 300,000 tons of coal next year,
as part of the former's expansion program in diversifying its
businesses.

"Mitsubishi is our regular tin customer, with a contract of
about 5,000 tons of tin next year. They are also interested in
our coal products, and plans to ink deal with us," said Timah
president Thobrani Alwi.

Thobrani also said that it was seeking to sign a similar deal
with South Korean Daewoo soon to export about 30,000 tons of coal
per month next year.

Timah has projected its coal output to reach around 400,000
tons at the end of this year and 1 million tons next year, with
the company currently in negotiation to acquire several smaller
coal producers in East Kalimantan in order to increase coal
production. -- JP