Tin: PT Timah starts construction of new US$80M smelter

PT Timah logo

The world’s second-largest tin producer, PT Timah, has begun construction of a new US$80M tin smelter, located in Mentok, Bangka Belitung, Indonesia. Construction began on 30 January 2020 and the smelter is aimed to be operational by mid-2021. The development, using Ausmelt technology, outlines a major capacity upgrade of 40ktpy to PT Timah’s current smelting operations at Mentok. PT Timah’s two main smelting operations, at Mentok and Kundur in Riau, have a current combined capacity of 54ktpy. The upgrade will allow PT Timah to process hard rock feedstock. Its current production, estimated at 35kt in 2019, relies on alluvial tin feedstocks.

Roskill View

This substantial upgrade to processing capacity marks a major step in PT Timah’s plans to compete with Yunnan Tin as the global market leader for refined tin production. Yunnan Tin’s current capacity sits at 80ktpy, a figure that is likely to rise with Yunnan Tin widely expected to follow in PT Timah’s steps to raise production capacity.

Whilst PT Timah embarks on a move to raise capacity, it may come as a surprise that several major tin producers, including PT Timah and Yunnan Tin, plan to reduce output in 2020, with expected cuts of 30kt. This move comes as LME prices hit a three-year low of US$15,700/t in August 2019.

Prices had shown signs of recovery after the announcements of output cuts in September 2019, peaking at US$17,750/t in January 2020; however, supply chain disruptions due to the Coronavirus outbreak saw prices drop back to US$16,150/t in early February 2020. The global market is expected to recover relatively quickly from the impacts of the Coronavirus, once health issues are resolved and regulations eased. The International Tin Association forecasts rising tin demand in 2020, particularly in China’s solder market. This increase in demand, paired with cuts to output, indicates room for price increases later this year.

PT Timah’s new smelter and its capabilities give an insight into the future of the tin market, particularly that in Indonesia. Historically, the Indonesian tin supply chain has generally relied on alluvial tin feedstocks, a sector that appears to be reaching peak production with few prospective near-surface alluvial tin deposits remaining. The new smelter has the capability to process hard rock feedstock at substantially lower grades, signifying a change in strategy for PT Timah and the need to move to lower grade primary onshore sources, as opposed to offshore.


Roskill’s Tin: Outlook to 2029 report was published in October 2019. The first quarterly update will be available to subscribers in February 2020. Click here to download the brochure and sample pages for the report, or to access further information.

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This article was written by Adam Slade. Please get in touch below if you wish to discuss further:

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