Timah predicts tin prices will stay at current levels<\/p>\n
Rendi A. Witular, The Jakarta Post\/Jakarta<\/p>\n
State PT Timah, the world's largest integrated tin miner, said
\ntin prices were unlikely to get stronger next year despite higher
\nglobal demand, due to rampant illegal trade of metal.<\/p>\n
Timah finance director Wachid Usman said tin prices were
\nprojected to stand at between US$8,000 and $9,000 per ton next
\nyear, more or less the same as this year's average, with demand
\nexpected to increase by 5 percent to 280,000 tons.<\/p>\n
\"Illegal tin mining and trading activities by local
\nbusinessmen on Bangka island to traders in Singapore will flood
\nthe market with cheap illegal tin, which will eventually halt tin
\nprices from increasing,\" said Wachid.<\/p>\n
Bangka island, located off the coast of Sumatra, has the
\nworld's largest tin deposits with some 420,000 tons of proven
\nreserves. The reserves, which are estimated to last for another
\n10 years, do not include those located offshore the island.<\/p>\n
Wachid said the volume of illegal tin mining and trading was
\nunknown. However, the Bangka-based Timah said that the activities
\nover the past six years have caused the company to suffer a
\npotential loss of at least Rp 500 billion (US$55.5 million).<\/p>\n
Moreover, the lack of raw tin material due to the widespread
\nillegal tin mining had caused Timah to lower its production
\noutput this year to about 40,000 tons from 45,906 tons last year.<\/p>\n
All this calamity started with the implementation of the
\nregional autonomy law, which allowed the Bangka-Belitung
\nprovincial administration to issue licenses for local companies
\nto export tin, although the central government banned the export
\nof raw tin. This has mushroomed illegal mining and trade
\nactivities on Bangka island.<\/p>\n
Wachid said that the company had recently reported the problem
\nto State Minister of State Enterprises Sugiharto, who is expected
\nto discuss the matter with the Ministry of Home Affairs.<\/p>\n
The Ministry of Home Affairs has the authority to scrap
\nregulations issued by local administrations.<\/p>\n
\"We expect the new government can enforce the law and help
\nregulate the tin mining activities on Bangka island. The flooding
\nof illegal tin in the global market is feared to ruin the already
\nstrong tin prices,\" said Wachid.<\/p>\n
Tin prices have surged 73 percent on the London Metal
\nExchange this year to $9,150 a ton, following a higher global
\ndemand of tin for solders to bind electronic components.<\/p>\n
The average price of tin received by the company during the
\nthird quarter of this year was $9,178 per ton, which was 93
\npercent higher than the same period last year. The average price
\nduring the first nine months of this year was $8,193 per ton or
\n72 percent higher than the same period last year.<\/p>\n
Wachid said the rise in tin prices were triggered by a
\ndecision from the European Union (EU) to ban the use of lead for
\nsolders starting in 2006 due to environmental concern. The United
\nStates and Japan were expected to follow the EU's decision.<\/p>\n
\"We have received an increasing request from electronic
\nproducers in Japan, South Korea and Taiwan due to the EU
\nregulation. We will focus on that market for next year,\" said
\nWachid.<\/p>\n
Solders are expected to account for about 60 percent of global
\ntin demand next year, with the remaining from food-can makers.<\/p>\n
Food-can producers are likely to avoid tin and turn to
\naluminum and tin-free steel for their raw materials next year due
\nto environmental reasons.<\/p>",
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