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IndonesiaÂ’s tin output to fall sharply By John Aglionby in Jakarta
Published: January 30 2007 17:57 | Last updated: January 30 2007 17:57
Tin production in Indonesia, the worldÂ’s largest exporter, will fall by up
to a third this year due to new government regulations to clean up the
industry, the head of the countryÂ’s largest manufacturer predicted on Tuesday.
Thobrani Alwi, the president of Timah, estimated that production would drop
to 80,000-90,000 tonnes from 120,000 tonnes last year because the new rules
will force the majority of exporters out of business for months and some
permanently.
From February 23 tin exporters will have to register with the trade ministry
and pay the government royalties of 3 per cent. Registration will require
having oneÂ’s own licensed production area or sourcing from a licensed
contractor and an approved environmental impact assessment study. Many smelters
buy tin from the thousands of people mining tin illegally with no environmental
controls.
The price of tin on the London Metal Exchange soared to a near 20-year high
of $12,425 last week after the rules were announced. It traded at about $12,250
a tonne on Tuesday, up 64 per cent over the past 12 months.
Of the 39 Indonesian tin producers and exporters, only two currently meet all
the regulations.
One of them is Timah. Mr Thobrani estimated that about a dozen of those shut
down might meet all the regulations.
“Some might be able to restart after a few months,” he told the Financial
Times. “Others might choose to work with Timah but many will probably have to
close.”
Illegal mining last year accounted for about half of IndonesiaÂ’s production.
A multi-departmental government team is in Bangka Belitung, where all the
illegal miners are based, helping them assess their options.
Mr Thobrani said a “reasonable” price for tin was $12,000 to $13,000 a tonne.
He said Timah might increase its capacity if the price rose to about $13,000
a tonne or if LME stocks, currently 11,555 tonnes, dropped dramatically.
TimahÂ’s capacity is 50,000 tonnes and it has at least 10 years of reserves.
Global demand, which has risen in recent years since tin started replacing
lead for soldering, is predicted to be about 365,000 tonnes this year.
Tin is also used in cans, alloys and glass production.
China is the worldÂ’s largest producer but keeps much for domestic
consumption. Indonesian tin is usually of a higher quality.
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