Yunnan Tin Co. Ltd., the world's biggest tin producer, plans to accelerate overseas investment due to decreasing tin reserves, the company said during an April 4 earnings call.
China is the world's biggest tin producer and smelter, according to the International Tin Association, but its mines are aging and ore grades are declining. Tighter approval procedures for new mines have been slowing development of new projects, dragging down tin supplies, Huachuang Securities said in a Feb. 26 note to clients.
Yunnan Tin's mined tin output decreased 1.76% year over year to 34,383 metric tons in 2022. Its total ore reserves fell 1.49% to 265 million metric tons, with tin reserves dropping 1.95% to 667,000 metric tons during the year.
The company is exploring mineral resources near its Gejiu mining area in Yunnan province, and it is accelerating research and acquisition of overseas projects to secure upstream resources, Deputy General Manager Huang Shi told investors on the call.
As part of China's Belt and Road Initiative, Yunnan Tin is looking for resources in Southeast Asia, Africa and South America. The state-backed company's plan to accelerate its acquisition efforts comes on the heels of China easing its COVID-19 restrictions, Huang said.
Yunnan Tin's net profit slumped by 52.21% year over year to 1.35 billion Chinese yuan in 2022 due to falling tin prices. The company accounted for 47.78% of China's tin output in 2022, down by 1.53 percentage points year over year. Yunnan Tin produced 22.54% of the world's tin in 2022, down by 1.37 percentage points year over year, according to the company's annual report.
The tin price achieved a record high of $49,500 per metric ton on March 8, 2022, following Russia's invasion of Ukraine. However, the price dropped by more than 60% to less than $18,000/t at the end of October 2022 after high pricing earlier that year spurred increased production. The tin price was also affected as demand weakened for consumer electronics and household appliances due to a global economic downturn.
Yunnan Tin expects tin prices and demand will pick up in 2023, thanks to improved sales of consumer electronics and household appliances amid China's reopening. It also expects solar panels and lead-acid batteries will contribute to demand growth in the longer term.
Sales from tin's downstream industries, including electronics, solar, construction and cement, have begun to bounce back, but the recovery has been gradual and tin prices will be affected by an interest rate increase in the US as well as the external environment in general, according to Chen Xiongjun, a deputy general manager of the company.
Rebounding tin prices will be an incentive to develop new tin supplies, and Yunnan Tin will strengthen cooperation with overseas miners to import tin resources, Chen said.
As of April 3, US$1 was equivalent to 6.88 Chinese yuan.
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