Govt to build tin smelter in Bangka to boost output
The Jakarta Post, Jakarta
In a bid to boost the country's domestic tin production and better control the problem of widespread illegal mining in the Bangka Belitung islands, the government plans to collaborate with a number of players in the sector to develop a new smelter in the area.
The Ministry of Energy and Mineral Resources' Director General of Geology and Mineral Resources Simon Sembiring said on Monday the Bangka Belitung provincial administration would form a joint venture with state tin producer PT Timah and local company PT Kobatin to build the smelter.
"The smelter is needed to process tin production in Bangka Belitung," said Sembiring.
At present, much of the illegally-mined tin is exported, which in turn reduces the domestic tin supply.
According to Sembiring, the existing facilities in the tin- rich province can only process 80,000 tons of tin per year, while production, including that from unauthorized mining as well as from Timah, stood at 110,000 tons a year.
The rapid expansion of illegal mining on the islands started with the rolling out of regional autonomy, which allowed the Bangka Belitung provincial administration to issue licenses to local companies to export tin, despite the central government's ban on the export of unprocessed tin.
According to the ministry, the illegal mining industry on Bangka island employs an estimated 17,000 miners, and supplies about half of the country's annual tin output.
Bangka island, situated off the coast of Sumatra, has the world's largest tin deposits with some 420,000 tons of proven reserves, not including those located offshore.
Timah, the world's largest integrated tin miner, which operates mines on the island, has claimed that illegal tin mining and trading over the past six years have inflicted potential losses on the company of at least Rp 500 billion (US$52.6 million).
The company had to lower its production output to about 40,000 tons last year from 45,906 tons a year earlier due to a lack of raw material caused by illegal tin mining on Bangka island.
Metal prices, including those for nickel for stainless steel and tin for electrical and automotive products have soared since 2003, driven by the high demand for these commodities arising from rapid economic growth in China.
Tin prices last year averaged $8,842 per ton, 76 percent higher than the average price of $4,817 a ton in 2003. At its peak, tin was trading at $10,100 a ton in 2004.
According to Bloomberg, tin for delivery in three months was traded at $8,040 a ton on the London Metal Exchange on Monday.