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Markets // Market Analysis

PT Timah reports strong Q1 performance

Thursday, 06 July 2017

Integrated Indonesian tin producer, PT Timah, has reported a strong first quarter for production, with mine output up 125% year-on-year to 7,675 tonnes in 2017 and refined production up 65% to 6,963 tonnes.

The company reported in a press release that the increase was a result of reconstruction and replacement of production facilities, increased production capacity and better support facilities. The company's ongoing efforts in this area include the opening of new onshore mine units, additional cutter suction dredges and investment in more efficient and effective smelting technology. Despite the year-on-year rise, mine output was down 5.8% and refined production fell 10.2% compared to the final quarter of 2016.

Offshore mining contributed just 3,266 tonnes of tin-in-concentrate in Q1, or 43% of the total compared to an average of 70% over the course of 2016. PT Timah is optimistic that production in the second half of the year will improve further because of the arrival of the dry season, which should support output from its offshore tin operations. As a result the company is targeting tin ore production of 32,000 to 35,000 tonnes for 2017.

ITRI View: While infrastructure investments and process efficiencies may have contributed to the year-on-year increase in Timah's tin production, we believe the increase is largely due to comparison with historically low Q1 production in 2016 as a result of delays in the issuance of new export licenses and extreme monsoon weather conditions.

The latest Indonesian trade ministry data reveals that Indonesian tin exports declined by 48% year-on-year in June to 4,005 tonnes, or 42% from the reported figure in May. The low volumes of tin exported from Indonesia in June, at 4,005 tonnes according to recent trade ministry data, are the lowest so far this year. We understand this was mostly due to the combined impact of Ramadan and the lower tin price over the course of the month although rumoured export license renewals by private smelters may also have had an impact.

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