Timah Trims Capex 50% Amid Weak Tin Market
thejakartaglobe.com
PT Timah, the world’s largest integrated tin producer, has cut its 2009 capital expenditure by half to Rp 350 billion ($34 million) from Rp 700 billion, saying that it believed the demand for tin may not recover this year.
“The world’s economy is not getting any better,” said Wachid Usman, Timah’s president director, on Wednesday.
“Therefore, we have to revise our capital expenditure this year with some of our projects, such as the asphalt project in Buton, South East Sulawesi, until the economy recovers.
“The new levels of capital expenditure this year at Rp 350 billion will be sufficient,” Usman said, adding that this would not allow Timah to acquire coal mining concessions.
Usman said that the current global economic crisis had caused a slump in tin demand and company profit.
“In 2007, the world’s demand for tin was at 350,000-360,000 tons, but it decreased to only 320,000 tons last year. We expect tin demand will be at about 300,000 tons this year,” he said.
Timah expected to sell about 46,000 tons of tin this year, slightly down from last year’s sales of 46,438 tons, said Abrun Abubakar, Timah’s corporate secretary.
“All of the spending plans will be funded from our internal cash,” Usman said. The Belitung-based company previously had earmarked Rp 700 billion in capex earlier this year.
Some of the Rp 350 billion will be used to purchase three small dredging ships “for a total price of about Rp 80 billion,” Usman said.
The company also plans to construct two factories to produce chemicals used in processing tin for Rp 250 billion.
Two large dredging ships that would have cost a total of Rp 440 billion would not be included in the 2009 capital expenditure, but purchased in 2010, Usman said. |
