JAKARTA (TheInsiderStories) – The state-owned tins producer, PT Timah Tbk (IDX: TINS), allocated a capital expenditure of Rp1.9 trillion (US$134.75 million) for this year, said the management yesterday. The fresh funding will uses for expansion and capital injection for the subsidiaries.
The spokesman, Muhammad Zulkarnaen, stated the amount of investment higher than last year, worth of Rp1.5 trillion. Most of the funds used to maintain the company’ debt equity ratio. This year, the producer targeting the production volume more than 50,000 tones and the sales volume to be around 92 percent of the capacity production or equivalent to 46,000 tones.
In 2021, he said, the growth of world refined tin consumption to increase by 3.6 percent or around 353,900 tones compared to consumption of 341,600 tones in 2020. He is optimistic that the metal industry, especially tin, will improve inline with global trend prices.
In the first nine months of 2020, the unit of PT Indonesia Asahan Aluminium (MIND ID) recorded a larger loss of Rp255.15 billion due to higher production costs. The operating income dropping 18.42 percent to Rp11.87 trillion in annual basis. The net loss rose 45 percent from the same period of last year amounting to Rp175.78 billion.
Recently, Timah is exploring a loan facility amounting to $100 million from its MIND ID to refinances the company’ bank loans and for working capital. Finance director, Wibisono, reported that his party has proposed the coupon rate of the loan below 2.5 percent with one year of tenure.
“We are trying to replace some of our US Dollar debts into shareholder loan. This is a natural hedge strategy to avoid a high fluctuation in the exchange rate so the impact will not hit our profit and loss,” he told reporters on Nov. 10, 2020.
As early November, the miner has bank loans Rp6.6 trillion. Of that amount, the company’ dollar debt reached $126 million. Now, the issuer has withdrawn a loan of around $30 million for the expansion of the ausmelt furnace smelter in Muntok, Bangka Belitung. The completion of the smelter is targeted on January 2022 with total costs $80 million.
State-owned construction firm, PT Wijaya Karya Tbk (IDX: WIKA) acted as the contractor of the project. This project is assisted by the Finnish export finance agency, Finnvera, along with MUFG Bank and Indonesia Eximbank. The unit of MIND ID also looking strategic partners for rare earth mineral projects.
In June, Timah has cut its tin sales to 55,000 metric tones (MT) due to lower demand. The amount lower than the realization of sales in 2019 amounting to 67,704 MT. The limiting production operations in South America and the tendency of larger producers such as China to use their own production are driving the downsizing. At present, the state-owned firm’ market share in the global market reached 20 percent.
During 2020, the company temporarily suspended a number of projects, like the smelter project in Nigeria, Africa. In 2017 due to the COVID-19 pandemic. The producer planned to invest billions of dollars in the Nigerian minerals and mining sector and has signed a joint venture agreement with Topwide Ventures Ltd., to explore, mining, processing and refining, transportation, sales and marketing of tin and mineral derivatives that exist in the African Continent.
The management also decided not to continued the buy back shares program was scheduled on March 16 to June 16. Earlier, the company prepared Rp100 billion for the program helped by PT Danareksa Sekuritas. Timah, he continues, strives to pursue cost efficiency on all production lines to reduce the company’ production and operating expenses.
In the third quarter of 2020, the issuer still posted a net loss Rp255.16 billion, better than the loss in the second quarter of Rp390.07 billion. Refined tin sales down 9.49 percent to 45,548 tones and affected the company’ revenues. Until September, the revenues fell by 18.42 percent to Rp11.88 trillion from a year ago Rp14.56 trillion.
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