Tin Mining

Aug 23rd, 2008, in Business & Economy, by

CallumCallum on the tin mining industry, government limiting of production and exports, and illegal mining.

The Department of Energy and Mineral Resources has outlined plans to limit tin exports. Indonesia, the world's biggest exporter of tin and second largest producer after China, has confirmed plans to limit production of the commodity in a bid to support prices and extend the life of the local industry.

The new rules, which are expected to limit production to 90,000 tonnes this year and up to 100,000 tonnes in 2009, will be introduced within the next month. 65% state owned PT Timah accounts for half of Indonesia's tin production. It is believed that production problems at PT Timah are the cause of the government's decision to limit production.

PT Timah has been struggling to meet production targets, it is worried that it may not meet its target of 50,000 tonnes this year. The company is investing in the expansion of its offshore dredging capacity, but in the short-term this may be offset by falling onshore production. The declining supply from its onshore mining areas was partly due to some small miners permitted to operate on its concessions illegally selling to third parties rather than Timah.

This is an ongoing problem for the tin mining industry. As tin deposits tend to be at fairly shallow depths and also highly concentrated they lend themselves to exploitation by "Midnight Mining" crews that will strip out tin deposits and then sell them to black-market ore dealers. A friend who works as a security consultant says that this is an ongoing problem. The rewards are so great for these illegal miners that they have been known to bribe mining company employees to get exploration data of the richest deposits.

Indonesian proven reserves of tin have fallen to 800,000 tonnes or 8 years production. If concerted efforts are not made to find new deposits, Indonesia may find itself becoming a small, marginal producer.

The government's decision to limit tin production will only increase prices and make these illegal mining operations more profitable. We have already seen tin prices rise 7% last week on the back of the governments announcement.


Man at an illegal tin mine in Bangka Belitung.

A better long term strategy for the tin mining industry is to open more concessions for companies to mine legally. This would encourage many of the illegal operators to start working legally which would add to government revenue and also bring their operation under proper environmental scrutiny.

This however will take a complete change in mind set in the Government, their present view of natural resources as being there for the enrichment of the political classes rather than a resource that should benefit the people who work in the industry and pay taxes, means that they will cling to failed strategies that mimic the World Tin Council.


10 Comments on “Tin Mining”

  1. avatar DXP says:

    I have told you, Indonesia’s problem is the ‘mentality’ problems
    – National car : can survive with protection only
    – National oil & gas : can survive with MNCs dependency
    – National mining : can survive with inadequate finish product’s value add at the greater expenses of earth destruction
    – National amunition & artilery : can survive for domestic market only
    – National air-craft : can survive as spare-part makers & interior assembly subcont only
    – other ? ? ? ?

  2. avatar sputjam says:

    Sell the mining concession to the highest bidder. That means state gets money up front and investor gets the risk to their bid. Any pilferage investors problem. Profits from mining gets similar taxation as other business that escalates with increasing commodity prices.

  3. avatar Purba Negoro says:

    DXP

    China has massive tariff barrier for import- what are you talking about?
    It is also the world’s worst Intellectual Property Rights thief.

    Any Chinese “innovation” is reverse engineered foreign technology. Jack Wagner CEO of Buick-GM CHina: “Chinese R&D?- you mean reverse engineer and duplicate”

    China now in trouble with Russia for copying its’ tanks and selling them.
    Shanghai Automotive was sued by Audi for reverse engineering the Quattro
    The list is endless.
    The next Chinese plane will be a reverse engineered F-16 courtesy of Israeli plans.

    Chinese are the main culprit in illegal mining in Indonesia- even multinational will state that.

  4. avatar Sumitomo says:

    You are saying :…..The government’s decision to limit tin production will only increase prices and make these illegal mining operations more profitable.

    So …you wanna say “no need to increase Tin price , and you think Illegal minning will not profitable from a lower tin price? ” ^_^

    The only Solution for Illegal Minning is Law Enforcement as Pak Kapolri Sutanto did, and now we can see Tin Price Higher, better for Indonesia and PT Timah.

  5. avatar Rob says:

    The problem of illegal tin mining is more about enforcement of laws and regulatins rather than a fluctuating tin prices.

    Illegal tin mining is profitable because there is little to no enforcement. Is this because there are “special and unnamed” interests behind the illegal tin miners? Perhaps.

    Maybe, the reason is that some tin miners have decided it is still cheaper for them to buy tin sourced from illegal miners than it is to mine the tin themselves. It is cheaper because there is no infrastructure costs to speak of and if it is mined outside of their concessions then there is no environmental costs such as reclamation.

    Of bigger concern is the dwindling amount of proven tin reserves. So, if new reserves are not discovered (assuming they exist in the first place) then Indonesia does not risk becoming a bit player in the tin industry, but rather it will become a bit player or perhaps not even a player at all.

    Sputjam…in theory perhaps this works to a small degree. However, it presupposes a number of things. Firstly, that the concession process is open and transparent. Second, that investors are granted access to accurate proven reserves data. Third, that if the risk is to be assumed by the investor are they then also responsible for policing of their concessions / reserves?

    Most mines have security details aimed at reducing and eradicating illegal miners however once these miners are caught and then are turned over to authorities they are let off. The illegal miners are then back at work within 24 hours. So, should investors therefore be allowed to jail on site illegal miners in order to protect their concessions seeing the investor is assuming the risk?

    PN…

    Do not see the relevance of IPR and “reverse engineering and duplicate” arguments to the illegal mining one. This is nothing more than another opportunity for you to take a swipe at Indonesians of Chinese extraction and Chinese in general.

    On this point, perhaps you could mention a multi-national or two who would be prepared to state that:

    Chinese are the main culprit in illegal mining in Indonesia- even multinational will state that.

    This would be worth writing about in the more mainstream Indonesian press as well perhaps.

  6. avatar Purba Negoro says:

    Hello Rob!
    You’re an intelligent, cultured thoughtful man who contradicts all negative stereotypes about bules.
    I enjoy reading your intelligent, constructive comments.

    Yes- you are right about my comments- the purpose was not to hijack the discussion but rebut DXP’s ridiculous argument.

    Callum- your final paragraph is incorrect. BY the Indonesian Constitution- ALL natural resources are to benefit the people- this means NO privatization EVER.
    SBY was installed by the US seeking privatization of the lucrative Gas and Coal sectors- but they are thwarted due to the fact the Constitution is unalterable- SBY has been defeated every step of the way to privatise Indonesian strategic mineral wealth by foreigner.

    The security problem is simple- we will send in Commandos or Brimob for mop-up operation to remove all parasitic elements. Enforcement and punishment already organised.

    If US, UK, or Australia thinks it has a remote chance of setting foot in Indonesia- it can think again. We remember very clearly the blood of Indonesians on all of your hands and how you all fought to re-install the Dutch, then instigate regional seditionists. We have rooms upon rooms of documentation: overwhelming evidence of guilt and complicity.

    We will NEVER allow you to colonise us again- even by stealth.
    The smug White with his White Man’s Burden and typical superiority complex dare lecture us on how we conduct ourselves, at home, effecting ourselves alone.
    If you do not like the way we play the game, on our home turf- the exit door is open.

    Here is the cheek of it all:
    The West monas and wrings hands about centralised government: “Boo-hoo what about rights and minorities?”
    Then they impose de-centralisation via coercion.
    Then they complain the resultant greedy regional kleptomaniacs- we warned them would create- won’t let them play.

    As regards Tenders- the West is hardly open-book either- why else does Halliburton-KBR gobble up all contracts in Iraq?
    Why does Australia’s Transfield Company get award for building Submarines- despite absolutely no experience?
    Please- spare us your fundamentally flawd Moral Superiority and trite claims of Civlisation- the fact is your nations are far dirtier than ours.

    You see, in Indonesia- we do not lie to the UN, use our military to install pliant puppet regimes nor steal other nations’ mineral wealth and kill 600,000+ innocents- mothers and children for oil.

    We are not bastards, unlike some.

    Callum you and your corporate “Johns” (yes I can see the puppet-strings- Mr Marionette) can go play Freemason dress-up and secret hand-shake in your brothel Singapore where whitey is worshiped mindlessly.

  7. avatar Rob says:

    PN…

    I just gave you a serve over on the Pamungkas thread, but thanks for the compliment on this thread 😀

    I am not so sure that all of Australia fought hard for the re-installation of the Dutch as a colonial power in Indonesia. I think with a little bit of research you will find that Australian unions at the time were vocal and active in ensuring blockades against Dutch vessels in Australian ports.

    So, perhaps not all Australians are as evil as you characterize them to be!

  8. avatar Purba Negoro says:

    I believe it was Labour’s Lang and the Trade Unions only- the Conservatives were horrified.
    I have a friend who was an English migrant to Australia.
    He told me of Migrant Hostels filled with Dutch- and the Australians hated them all- “refos”?

  9. avatar Rob says:

    PN…

    Must have missed this one previously.

    “Refos” being for refugees, right?

    Been a while since I have heard the term. I think I was in high school when I last heard the cry, “refo, get back on the boat!”

    I wonder have times changed all that much?

  10. avatar Ramachondra Naique says:

    Any mining operation in general can be worked taking all the precautions for the protection of the environment and having in mind to benefit the community around.It should be the permanent attitude of the owner as well the operating staff.the attitude and theobjectives should be clear and real , such as to build a relation of trust between the population and the mine staf.With this kind of starting point, there is no reason to blame the mining for every dificulty during the operation

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