WACHID USMAN President Director of PT Timah Tbk

Tin production fuels local development initiatives
PT. Timah Tbk

Indonesia is the world’s second-largest tin producer. The biggest, China, is already falling short of its own internal demand; other major producers such as India are also importing, and demand in Asia continues to grow. This gives Indonesia a competitive advantage, firstly in the extent of its reserves and secondly, in the quality of its product.

Flying high as the largest tin metal producing company worldwide is PT Timah Tbk, which in the first quarter of 2007 registered profits of $35.7million, 26 per cent higher than the previous year. While much of this is attributable to the surge in world tin prices, up 66 per cent year on year, and the clampdown on illegal smelters within Indonesia, the company also bases its success on a commitment to growth through innovation and diversification.

As part of its growth strategy, Timah will be running four main programmes over the next five years. Firstly, the company is planning to expand its exploration activities, both for tin and other minerals, with the aim of securing its resource base. At the moment, Timah have special competence in offshore mining, and there is a fair amount of potential for mining gold, manganese and nickel in these areas. The second programme relates to stepping up investment in operations technology and human resources development. Thirdly, the firm is working to improve its marketing channel, allowing closer and more efficient relationships with buyers. “Today, almost 90 per cent of our products are in the hands of traders, but we believe that with an improvement in our marketing strategy we can change this,” says Wachid Usman, the firm’s president director.

The fourth objective for Timah is to continue to develop its relationship with stakeholders, both locally and internationally, through community development and corporate social responsibility (CSR).

World demand is oustripping supply

“We run three CSR programmes: poverty alleviation, education, and improvement of the local environment,” comments Mr Usman. Timah provides soft funding to small-scale local businesses, contributing between one and two per cent of its net profits to this type of financing, and runs a housing improvement scheme that provides public facilities such as clean water.

With a view to providing local students with a promising future, and at the same time training potential employees, Timah sponsors around 60 engineering students a year at the high school stage. For further education, the mining firm has established an engineering and manufacturing polytechnic, which provides one-, two- and three-year courses.

In terms of maintaining and improving the local environment, Timah contributes models for economic activities such as fish or poultry farming, to be established in ex-mining areas.

However, one of the main challenges is adding value to the company’s resources. “We need to expand our product range into the downstream market,” observes Mr Usman. As well as increasing basic production to 10,000 tonnes a year, the firm is studying the possibility of manufacturing and selling tin-based chemical products and super-conductors.