Indonesia’s state-controlled tin company PT Timah reported a 94% increase in its net profit to Rp 208.2 billion (US$ 22.7 million) in 2006, helped by a sharp improvement in volumes and margins in the final quarter of the year. The company’s net profit in the first three quarters of the year had been only Rp 61.6 billion, 39% lower than in the same period of 2005, which the company attributed to “fierce and unfair” competition from independent private smelters. However following the national police actions to shut these operations down in early October, market conditions both locally and worldwide changed dramatically.
Refined tin sales in the year amounted to 42,613 tonnes, less than 1% up on 2005, but higher prices pushed up the value of tin sales by 13%. Refined tin production rose by 6.9% to 44,689 tonnes. The company’s total turnover rose by 20% to Rp 4,076 billion (US$ 445 million), boosted also by a doubling of coal sales.
As a result of the police crackdown last October, Timah’s ore volumes increased substantially in the final quarter as it stepped up its purchases from small mines in Bangka and Belitung. The company reported tin-in-concentrate production (including purchased ore) of 51,847 tonnes in 2006, up by 21.7% on 2005. Of the 2006 annual total over 44% was obtained in October-December.
The big increase in ore purchases late in year also resulted in a large increase in stocks held at the end of the year, which included 13,325 tonnes of tin-in-concentrate, 10,925 tonnes of tin contained in slag and 5,199 tonnes of refined tin.
PT Timah’s results statement commented on the re-structuring of the Indonesian tin industry as follows:
“The Company is grateful to the Government that has started its steps in enforcing the laws and regulations on tin mining business. It is expected that such actions would be maintained consistently and sustainably, so that utilization of national tin resources would produce the highest and sustainable added value to the country’s economy, create a business climate that is healthy and fair, as well as develop the national tin industry that is competitive, responsible and environmentally sound.
The Company realizes that the existence of small scale miners cannot be just neglected. However, disorderly practice of small mining would create a heavy burden to the economy in the future as a result of their environmental destruction. Consequently, the Company has initiated a scheme to accommodate small miners in a mutually beneficial relationship, while keeping a strict adherence to health and safety standards, environmental management, and good mining practices. It is critically important that the initiative requires committed supports from all stakeholders in restoring order.”
