The move has the backing of the Indonesian government and will be facilitated by increased raw material supply, corporate secretary Agung Nugroho told Metal Bulletin during LME Week.
"The main reason we dropped to 24,000 tonnes [per year of estimated refined production this year] was that the tin price dropped to $13,000 per tonne and many mines stopped producing and it's not easy for them to restart, so we struggled to produce… next year will be different," Nugroho said.
Having dropped to a low of $13,160 per tonne on January 18, three-month LME tin prices have jumped 46% in the year to date to two-year highs – 27-year low in LME stocks and claims that supply from leading miner Myanmar has peaked are factors in its rise.
The increase in output at state-backed Timah, the world's third largest tin smelter and a key exporter to the global tin physical market, has the support of a new state-owned enterprise (SOE) holding company, Nugroho said.
Timah, alongside mining company PT Antam and coal producer PT Bukit Asam, will by the end of the year be integrated into state aluminium producer PT Indonesia Asahan, which will act as a holding company.
Subsequently, it will transition to a wholly owned government commodities business; the new company will take responsibility for regulatory issues, strategy, cashflow and asset management.
"It will allow us to focus on our business, on our own operations… we will have more capital and will be able to be more aggressive in terms of investments," Nugroho said.
Timah will use the additional capital to invest in three new dredging boats to raise its ability to secure more raw materials for smelting.
"Offshore mining is still the focus of our production," Nugroho said.
A potential 8,000-tonne rise in PT Timah's output could put pressure on physical premiums for tin, which are now $75-125 per tonne for 99.9% purity material – the Indonesian standard grade.
Premiums dropped in May this year after 1,750 tonnes of production from Indonesia's largest independent smelter, RBT, were delivered onto the LME.
Indonesia's PT Timah plans to raise tin production by 33% or more next year to at least 32,000 tonnes because of higher prices, it said.