Indonesia's small tin smelters face tin ores supply issue

By Dwi Sadmoko

PANGKALPINANG, Indonesia, Nov 26 (Reuters) - Some Indonesian small tin smelters are unable to increase production as wet weather had hampered mining, squeezing supplies of tin ores, industry officials said on Thursday.

Some small smelters have been processing tin slag as intensifying rains and strong winds hampered onshore and offshore mining, cutting tin ores supply from individual miners, said Johan Murod, director of Bangka-Belitung Timah Sejahtera, a consortium of seven smelters.

'We can't fully operate as we have run out of tin ores. Our suppliers have limited stocks of tin ores,' Murod said.

Members of the consortium have been operating at 30 percent capacity since they resumed operations in October, and cannot increase production due to lack of ores, he said.

The seven smelters, which have a combined capacity of around 2,800 tonnes a month, had to shut operations in late August when a police crackdown on illegal tin mining hit supplies of tin ore.

As a result, Indonesia's monthly exports could slow down in the remainder of the year, and may only reach 6,000 tonnes of refined tin in November, said Rudi Irawan, director of private smelter CV Stania Prima in Bangka.

That compares with an estimated 7,059.74 tonnes of refined tin in October and 7,755.30 tonnes in September, based on trade ministry data.

'Indonesia tin exports in November-December would be lower as wet weather hampered mining,' said Irawan, whose smelter produces 150-200 tonnes of refined tin per month.

'But it will depend on production at PT Timah because they are the only one with the ability to mine offshore,' Irawan said, referring to state miner PT Timah Tbk, the world's largest integrated tin miner.

Tin for three-month delivery on the LME has risen about 40 percent to $15,000 a tonne this year. It is trading about 42 percent below an all-time high of $25,500 hit in May last year.

Abrun Abukabar, Timah's spokesman, said that while the rains may slow production at Timah until the end of the year, it will not affect its full-year production target of 49,000 tonnes.

'We have factored in weather in our annual production target,' he said, adding that 'Timah's production will be lower in November than previous months as some of the dredges will have to operate along the coastline, where tin ore reserves are lower, rather than in the middle of the sea, to avoid bad weather.'

Timah has been adding more dredges since last year as it seeks to boost tin ore production from its offshore mines to compensate for depleting easily-mineable onshore reserves.

Timah estimated that its offshore mines would contribute about 50 percent of its total output this year, up from 30 percent last year.

((For Q+A on Indonesia's illegal tin mining

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(Additional reporting by Yayat Supriatna and Fitri Wulandari in Jakarta)

(Editing by Sara Webb)

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