Straits Trading (STC) / Msia Smelting Corp (MSC)

Straits Trading (STC) / Msia Smelting Corp (MSC): STC yday made a provision for a $24.5m liability due to its indirect subsidiary PT Koba Tin, whose contract of work renewal with the Indonesian govt is in doubt. STC owns 54.85% of MSC, an integrated tin producer that in turn owns 75% in Koba Tin. Koba Tin was involved in tin mining in Indonesia's Bangka-Belitung islands off the coast of Sumatra. Its operations were suspended last year amid losses due to a drop in tin prices and the looming expiry of its mining contract, which was to be on Mar 31 this year. MSC said yesterday that the Indonesian govt had granted Koba Tin a 3-month extension to the contract effective from April 1, while it continues to evaluate the 10-year extension to the contract till 2023 that Koba Tin applied for. MSC has a primary listing in Malaysia and a secondary listing in Singapore. It earlier announced that if the contract was not renewed by Mar 31, there will be an adverse impact on its investment and contingent liabilities totalling approx RM150 m ($59.8 m). It thus decided to make the full provision for its accounts for FY12. STC’s share of impairment is ~$24.5m. Indonesia is the world's biggest exporter of refined tin. Last year, it announced new mining rules that included a limit on foreign ownership in mines to no more than 49% after 10 years of production. The remaining 25% of Koba Tin is owned by Indonesia's largest tin miner PT Timah. MSC has said it would reduce its equity interest in Koba Tin to 30%, with the remaining 70% being Indonesian owned.