Indonesia's tin crackdwon to keep prices high Source: Antara
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Tin will fetch record prices over 2007 because of a regulatory clampdown on
illegal tin miners and smelters in Indonesia, the world's second biggest
supplier of the metal, analysts say.
Indonesia began closing down unregistered tin operators last year and
implemented stricter export regulations in February that require firms to
register for clearance.
The moves cut supply into the global market and contributed to a rise of about
15 percent in the tin price so far this year, with demand continuing to be
driven by China and India, the booming economies of Asia.
Isnaputra, a mining analyst with securities house Danareksa, told AFP the tin
price would average 14,000 dollars per tonne this year.
The commodity, used extensively in the electronics and other industries, has
been trading at around that level recently the highest for about two decades.
"Indonesia previously supplied 120,000 tonnes per year, which represented 17
percent of global tin supply. Half of its supply was from unregistered
companies," Isnaputra said.
Experts estimate Indonesia's supply could fall by about 30,000 tonnes in 2007
as firms comply with the new rules.
"Since 2000, China has taken the lead as the world's bigger tin consumer.
Previously it was Europe and the United States," Ahmad Solihin, an analyst at
Mandiri Sekuritas, told AFP.
Solihin said the tin price, which he believes may average 12,500 dollars over
the year, still well up on 2006, will depend on how serious the government is
about cracking down on the illegal miners.
"If all illegal smelters are banned, automatically the tin price (will rise)
... so far, the government has been serious and so far it's been successful."
State-linked PT Tambang Timah, the world's largest integrated tin producer, is
one of the few firms to have obtained clearance under the new regulations.
Its share price has rocketed from about 2,500 rupiah (0.27 dollars) in late
2006 to 11,400 as investors bet on bumper profits. The firm has an export
capacity of around 50,000 tonnes per year.
"We are doing well. We are continuing to export. We've shipped about 5,000
tonnes since February," said Prasetyo Saksono, the firm's corporate secretary.
Koba Tin, the country's second largest tin producer, has suspended deliveries
amid an ongoing probe in the Bangka-Belitung islands, which account for nearly
half of Indonesia's refined tin exports.
Three of the firm's top executives have been arrested on allegations that it
was involved in buying ore from illegal miners.
Refined tin for export must meet a purity level of at least 99.85 percent
under Indonesia's new rules. Firms must also submit three-monthly reports on
their exports and allow government-appointed surveyors to check the shipments.
Energy and Mineral Resources Ministry official Djoko Purnomo said that dozens
of small smelters had been shut since October as a result of the crackdown on
illegal operators.
"About 37 small smelters were forced to close because they did not have
licences from the central government. They only possessed an authorisation from
the local administration," Purnomo said.
Officials say the regulations are intended to curb unchecked shipments of tin
and mounting illegal mining, which some feared was causing environmental damage.
"It will prevent environmental destruction in Bangka-Belitung from getting
worse," Indonesian Mining Association spokesman Priyo Pribadi said.
He added that the regulations would also protect state-linked PT Tambang
Timah, since it is one of the few firms exporting under the new regime.
Some analysts say the high tin price will eventually encourage more supply
from elsewhere in the world and lead buyers to consider alternative metals,
causing the tin price to fall back.
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