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Posts Tagged ‘PT Timah’

Tin poised for record on supply shortfall

September 17, 2010 Comments off

“Tin prices rose to a two-year high, less than 10 per cent below the metal’s all-time high set in mid-2008, as production problems in Indonesia, the world’s top exporter, continued to tighten the market.
Tin prices have surged because of a drop in supplies from Indonesia. The country’s exports of refined tin, which account for a third of the global market, dropped 14.5 per cent to 43,263 tonnes in the first half of the year compared with the same period of 2009.

The drop comes on the back of a crackdown on illegal mining in Bangka-Belitug, off Sumatra island, and the depletion of the easily mined reserves. Small and medium-sized smelters, which depend on supplies from rudimentary family-owned mines in the island, have reduced output or shut down because of the lack of tin ore supplies and credit strains, analysts said.”

Source: Financial Times, September 15, 2010

Observations:

  • Tin is mainly used for solder, alloys and chemical applications. Demand is strong in China, which is building its own production capacity.
  • PT Timah, Indonesia’s main producer, mines alluvial tin using dredgers and floating plants. Although PT Timah manages to increase output, the reduction of output of small and unorganized onshore mines results in lower Indonesian output.

Implications:

  • If Indonesia wants to have a sustainable position as a producer of tin, it will have to organize small scale miners and processing of the ore. Many small scale miners don’t have the scale to compete with international corporate competition.
  • Technological improvements for the small Indonesian miners could reduce production costs by as much as 50%, thus making deposits feasible that are currently not considered for production.

©2010 | Wilfred Visser | thebusinessofmining.com

Price of tin hits highest level in two years

July 27, 2010 Comments off

“Falling supplies and rising demand from manufacturers in Europe and Asia are pushing tin prices to their highest levels in two years.

The price of the metal, a raw material in soldering and food packaging, has doubled since early 2009 and analysts believe it will soon rise above a key $20,000 a tonne barrier because of falling production in Indonesia, the world’s largest supplier, and strong demand from the manufacturing industry in Japan, South Korea and Europe.

The Sucden brokerage says: ‘It is hard to escape the conclusion that the tin market is tightening quite considerably and may continue to do so in 2011.’ The cost of tin rose nearly 9 per cent last week and on Tuesday it gained 2.5 per cent to $19,670 a tonne at the London Metal Exchange, the highest price in two years.”

Source: Financial Times, July 26, 2010

Observations:

  • Shortage of tin is expected as demand is increasing and no major new production is scheduled to start in the next year.
  • Over two-thirds of both production and demand of tin are in China and Indonesia. However, as national production in China does not keep up with demand, international trade is picking up.
  • The leading tin producing companies are Yannan Tin (China), PT Timah (Indonesia), Malaysian Smelting Corp. and MinSur (Peru)

Implications:

  • None of the diversified international mining houses is active in tin production (as core product). Diversification into this space is unlikely, as tin mining methods are very specific. As efficiency gains could be achieved versus the incumbents, junior niche players are likely to enter the base metal market.
  • Peru, Brazil and Bolivia have significant tin reserves, providing a potential for a surge of the tin market in Latin America. Solder, packaging and chemical applications would be the most likely demand source for the market.

©2010 | Wilfred Visser | thebusinessofmining.com