PT Koba Tin, a unit of Straits Trading's Malaysia Smelting Corporation Berhad (MSC), Tuesday said the Indonesian government is still evaluating an extension of its contract of work which just expired at end-March.

In the meantime, the government has permitted the mining firm to continue undertaking production operations until it completes its evaluation, for a period of up to three months maximum, effective from April 1, 2013.

PT Koba had earlier applied for a ten-year extension of the contract of work to the year 2023.

Failing to obtain a renewal would have an adverse impact on MSC's investment and contingent liabilities of about RM150 million (S$58.9 million) in PT Koba Tin, the former said. It added that it has accordingly decided to make the full provision of RM150 million in its FY12 accounts. 

http://info.sgx.com/webcorannc.nsf/AnnouncementLast3Months/3D257C869B63D02548257B410006A573?opendocument 

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Malaysia’s MSC to halt Koba Tin operations as contract expiry nears

SINGAPORE, Nov 7 — Malaysia Smelting Corporation will suspend mining and smelting operations at its majority-owned Indonesian tin unit to stem losses from lower prices and slowing Chinese demand ahead of the expiry of a work contract, the company said.

MSC’s decision to halt operations at PT Koba Tin precedes the expiry next March 31 of its mining contract, or contract of work (CoW) for the unit, which is 75 per cent owned by MSC and 25 per cent by Indonesia’s largest tin miner, PT Timah.

Indonesia, the world’s biggest exporter of refined tin, announced a series of new mining rules this year, including a limit on foreign ownership in mines to no more than 49 per cent after 10 years of production.

The rules are not affected by a review of parts of the country’s mining regulations announced this week.

“Due to continuing losses at PT Koba Tin and having evaluated the available options, PT Koba Tin has decided to suspend its entire mining and smelting operations to minimize further losses pending the renewal of CoW,” MSC said in its third quarter results release on Tuesday.

The company reported losses of RM41,465 for the nine months that ended in September, compared to a profit of RM106,389 for the corresponding period a year earlier.

“The operating environment continues to be difficult and challenging due to weaker demand and low prices for commodities arising from the prevailing global economic uncertainties including sovereign debt concerns, economic recession in Europe and slower growth in China,” it said.

Tin traded at US$20,738 a tonne on the London Metal Exchange today. The price of the metal, mainly used in solders for electronics, has gained about 8 percent this year but is well off a record above US$33,000 a tonne set in April last year.

Unlisted Koba Tin was the 11th biggest producer of refined tin in 2010, at 6,644 tonnes.

The government has asked PT Timah to take over the operations of PT Koba Tin when its contract expires in 2013, an official at the state-owned firm said in August.

A spokesman at PT Timah said he had heard that PT Koba Tin has to pay a fee to the government to continue mining activities until the end of March and had decided against this. He added that there was no update on the contract issue. — Reuters 

Higher tin prices boost Malaysia Smelting Corp 1Q profits

Revenue for the quarter rose 13.3% to RM737.87 million from RM651.18 million.  Earnings per sharewas 30.40 sen while  net assets  per share was RM3.89.

In a filing to  Bursa Malaysia  on Monday, May 9,  MSC  said the increase in net profit was due mainly to higher operating profits by its tin mining and smelting operations in Malaysia and  Indonesia  on the back of higher tin prices.

On its current year prospects, MSC said it expects its overall performance for 2011 to be better than last year.