Indonesia's tin islands: blessed or cursed?
Tue Oct 21, 2008 3:03am EDT


By Ed Davies and Fitri Wulandari

PANGKALPINANG, Indonesia (Reuters) - Tin mining on these sleepy islands off 
Sumatra has brought wealth, but at a price; it is literally eating away at the 

The scale of the environmental damage on the Bangka-Belitung islands can be 
most clearly seen from the air, revealing a lunar landscape of craters and 
hundreds of highly acidic, turquoise lakes created by centuries of largely 
unregulated tin mining.

Efforts in recent years to control illegal mining on the islands have 
reverberated thousands of miles away by spooking world markets for tin in 
global financial centers such as London.

"We will continue to clamp down as long as there are violations," said Iskandar 
Hasan, Bangka-Belitung's police chief, adding that mining was still going on in 
prohibited areas such as protected forests in the province of about 1 million 

Tin exports from Indonesia, the world's second-biggest producer after China, 
have slowed after a government clampdown on illegal mining in Bangka-Belitung, 
helping make tin one of the best performers on the London Metal Exchange in 
recent years.

The white metal, widely used in food packaging and to solder electronic 
products, hit an all-time high of $25,500 a tonne in May. It has halved along 
with falls in most other metals due to concerns over a global recession.

Indonesia's government has said it will set an annual tin production quota of 
100,000 tonnes from next year in a bid to reduce environmental degradation in 
the main tin-mining areas.

But the situation on the ground is often murky.

Thousands of small-scale traditional and often illegal mining operations sprung 
up in the late 1990s when the Asian financial crisis wiped out jobs in other 
sectors of the economy.


It takes only a short drive from the provincial capital Pangkalpinang, which 
boasts its own tin museum complete with display cabinets with gleaming bars of 
tin, to come across signs of mining right near the road.

One miner, Aji, who had come to Bangka three years ago from Lampung in southern 
Sumatra, said he was more worried about dwindling tin supplies than a police 

"In the past, it was very easy to find tin. Now it's very difficult," added the 
32-year-old, who earns about 100,000 rupiah ($10) a day, which he shares with 
two other miners in his team.

Sitting next to a large crater filled with murky looking water, Aji explained 
how the miners' search for tin with a high-pressure water jet to hose away the 
crumbling sand soil and then separate out the seams of darker ore.

Even this small-scale mining has left the area completely bare of the thick 
tropical vegetation that once existed.

>From Papua to Kalimantan, there are many examples of mining damaging 
>Indonesia's rich natural environment, with the situation often exacerbated by 
>lax policing, poverty and corruption. The explosion in unregulated mining in 
>Bangka helped tin exports soar and prices plummet in 2002 before a crackdown 
>on illegal tin mining and smelting in 2006 spurred a recovery.

David Bishop, managing director of UK-based tin consultancy ITRI, said mining 
on Bangka appeared to be on a more sustainable footing after the clampdown over 
the past few years.

ITRI, which is backed by the tin industry, also said in a recent report that 
small-scale or illegal mining in Indonesia was also being curbed as shallow 
higher grade alluvial reserves had been rapidly depleted, while production 
costs had risen.

Several of Indonesia's small tin smelters stopped production at the end of 
September and will likely stay shut for the rest of this year because of the 
drop in tin prices.

"Our miners that supply tin ore have been idle because they can't cover 
production costs due to falling tin prices," said Patris Lumumba, director of 
Bangka-Belitung Timah Sejahtera, a consortium of seven smelters.


Eko Maulana Ali, governor of Bangka-Belitung, said that 40 percent of the 
islands' workforce was currently involved in tin mining and dependence had to 
be cut, but at a manageable pace.

"Gradually, we try to stop them," he told Reuters, referring to small-scale 
traditional and often illegal mining operations.

Authorities were try to encourage people to work instead in industries such as 
tourism, maritime and agriculture.

Bangka is ringed by beautiful beaches but gets few visitors due to limited 
transport links and tourism infrastructure.

A new terminal is being built at Bangka's tiny airport and the runway would be 
extended to 2,500 meters from 2,000 by the end of 2009 to allow in more planes, 
the governor said.

But there are few hotels catering to international visitors and little service 
culture. During a recent stay at a resort near Pangkalpinang to attend a mining 
conference, the tap water was erratic and the chef failed to show in time for 

Even with a slowdown in small-scale mining, efforts to restore damaged land, 
such as by replanting trees, were proceeding very slowly. A local official 
estimated that 619,000 hectares (1.5 million acres) had been damaged by tin 

Ali, the governor, said it costs 5-10 million rupiah per hectare to 
rehabilitate these areas.

Some Indonesian tin mining companies are looking to exploit tin deposits in the 
surrounding sea using dredges.

PT Timah, the world's biggest integrated tin miner and headquartered in 
Pangkalpinang, plans to spend a total of 350 billion rupiah on seven new small 
dredges and one big dredge this year to increase off-shore mining activity.

With the new dredges, the firm expects to source half its tin ore from 
off-shore mining by 2009, compared to a fifth at present.

(Additional reporting by Dwi Sadmoko; Editing by Megan Goldin)

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