Indonesia May Introduce Tin-Export Quota, Timah Says (Update1) By Naila Firdausi and Haslinda Amin Nov. 5 (Bloomberg) -- Indonesia, the world's second-largest tin producer, will probably cap exports next year at a quarter less than the level in 2006 in a bid to support prices, the head of state-owned tin refiner PT Timah said. The government may introduce an export quota of 90,000 tons for 2008, Wachid Usman, president director of the Pangkalpinang- based company, said in an interview. Exports were 120,000 tons last year, according to research group ITRI Ltd. Shipments in 2007 may be 88,560 tons, a government official forecast in May. Tin prices have surged to their highest since at least 1989 this year as demand rises and Indonesia cracks down on illegal mining. Officials in the Southeast Asian nation have said they may introduce a quota system to bolster the price of the metal used in cans and soldering. ``Next year's production all depends on Indonesia, we're expecting 90,000 to 100,000 tons in production,'' said Peter Kettle, research head at St Albans, England-based ITRI. Still, ``global stocks of tin are more than adequate.'' Tin futures on the London Metal Exchange reached $17,050 a metric ton on Aug. 7, the highest since the contract started trading in dollars in 1989. The metal has gained 64 percent over the past year, and closed at $16,550 a ton on Nov. 2. Tin was untraded in Asia today as of midday Singapore time. Quota Plan ``The quota will be implemented hopefully as soon as possible,'' Usman said in the Nov. 2 interview in Jakarta, without giving a timeframe. ``If the government doesn't implement the quota, illegal mining will be more aggressive.'' Timah, the best performing stock over the past year on the LQ45 Index which tracks the 45 most widely held stocks on the Jakarta Stock Exchange, gained as much as 3 percent to 22,400 rupiah today. It traded at 21,900 rupiah at 11:47 a.m. ``The current price is not high,'' Usman said. ``Demand is increasing because more industries are using tin. Not only electronics, but petrochemical and chemical industries.'' Mangantar Marpaung, director for coal and geothermal development at Indonesia's energy and mineral resources ministry, said in March the nation may introduce a quota, targeting a price above $12,000. Indonesia may export 88,560 tons of tin this year, Simon Sembiring, director general of coal and mineral resources, said May 29. Only China mines more tin than Indonesia. Police in Indonesia shut 20 tin smelters in October last year on allegations they used illegally mined ore. The government also ordered mining companies to register from Feb. 23 for the right to export the metal. $30 Million Expansion Timah, 65 percent owned by the government, plans to spend $30 million in the next two years to dredge for tin at greater depths, Usman said. This could reduce its reliance on the small mining companies that provide 70 percent of its onshore supply. ``There's lots of offshore potential in Indonesia that needs to be looked into,'' said Kettle. ``It's something for big companies, as small companies can't do it.'' Timah will work with Netherlands-based IHC Holland Merwede BV to dredge at depths of more than 50 meters (164 feet), Usman said. The Indonesian company already has 14 dredgers that operate in depths up to 50 meters. Supply from dredging may be 20,000 tons by 2009, while as much as 40,000 tons will be mined on land, he said. Timah may sell 56,000 tons of tin this year, Usman said. That compares to a June forecast that production may exceed 50,000 tons. Timah's third-quarter profit rose to 483.7 billion rupiah ($53 million) from 37.68 billion rupiah a year earlier, according to Bloomberg calculations based on nine-month figures released Oct. 31. Sales almost doubled to 2.5 trillion rupiah. ``Timah has benefited from the government's crackdown on illegal mining and exports,'' said Agus Yanuar, chief investment officer of PT Samuel Aset Manajemen, which manages $142 million in assets including Timah. ``That has helped Timah to buy tin to smelt at reasonable prices.'' To contact the reporters for this story: Naila Firdausi in Jakarta at [EMAIL PROTECTED] ; Haslinda Amin in Jakarta at [EMAIL PROTECTED] Last Updated: November 5, 2007 00:03 EST
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