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Indonesian mining firm to set up two subsidiaries in Myanmar

Publication Date : 04-02-2013

 

Publicly listed Indonesian tin mining company PT Timah says it will establish two subsidiaries to support its operations in Myanmar.

PT Timah president director Sukrisno said one subsidiary would operate the firm’s tin mine in Tanithary province in Myanmar and the other would market its tin produced in Myanmar.

“We expect the two new business units, which will be fully owned by Timah, to begin operations in 2014,” Sukrisno said in Jakarta.

Timah, according to Sukrisno, expected to start exploration in Myanmar in June. The firm is currently processing needed permits.

“There are several steps before we can really start exploring reserves there. Right now, the focus is to obtain all necessary permits from the local government in accordance with their mining procedures,” he said.

In November, Timah secured a concession in Pubyien-Tamok in Myeik, Tanithary, from Myanmar’s energy ministry.

The company has allocated US$18 million to develop the 10,000-hectare site over a three-year period, expecting to produce 10,000 tonnes of tin per year from the mine, which would make the firm the largest tin producer in the world.

The cost of the firm’s expansion plans into Myanmar would be sourced internally, Sukrisno said.

He added that Timah might receive offers of financial assistance from other institutions if it could collect dependable data on the concession’s tin reserves.

Timah’s plans in Myanmar were part of efforts to increase the firm’s tin reserves, as its reserves from concessions in Bangka and Belitung islands have started to lessen significantly.

The firm would also consider building a smelter in Myanmar, Sukrisno said.

Timah will operate its concession in Myanmar mine under a production sharing contract. The company has envisioned reaping 80 per cent of the production with the remainder going to the Myanmar government. The firm is currently still waiting for the local government’s response to its proposal.

When asked about his expectations for tin prices this year, Sukrisno said he hoped the commodity’s price would increase to between $25,000 and $30,000 per ton.

Tin prices have been hovering about $24,000 per ton as of January, up from the all-year average price of $21,000 per ton for 2012.

“We don’t have any plan to boost production, as tin prices are still changing,” he said.

Timah has said that it wants to produce 30,000 tonnes of tin this year, which would be up from the 29,600 tonnes it produced in 2012.

Timah (TINS) is one of several Indonesian state-owned corporations that have eyed expanding their business into neighbouring Southeast Asian countries.

The other firms include publicly listed cement producer PT Semen Gresik (SMGR), telecommunications company PT Telkom Indonesia (TLKM).

Indonesian state oil and gas firm PT Pertamina has also pondered expanding its business in the Southeast Asia region.

Sukrisno said previously that Timah would also cut costs to boost earnings.

“We want to press down costs from between $16,000 and $18,000 per metric ton on average to below $15,000 next year,” he said.

The company is expecting to operate a modified dredging ship converted from a bucket line dredger to a bucket wheel dredger (BWD), which would be able to operate in waters up to 70 metres deep with a lower cost of production and power consumption and higher productivity.

Only seven out of its 11 BLDs are currently in operation. A BWD dredger uses new technology that enables it to carry out mining activities at a depth of up to 70 metres. The BWD ship’s dredging capacity is two times higher than that of BLDs.

The BWD is one of the company’s development projects. Timah will develop two more BWDs next year after it reviews the operation of the first BWD.

Timah is also planning to develop an industrial zone in Bangka Belitung, which will host a tin chemical processing facility and other concerns, including coal power plant project.

 

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