Tin poised for record on supply shortfall

The Business of Mining - thebusinessofmining.com | September 17, 2010 | 2:53 pm

“Tin prices rose to a two-year high, less than 10 per cent below the metal’s all-time high set in mid-2008, as production problems in Indonesia, the world’s top exporter, continued to tighten the market.

Tin prices have surged because of a drop in supplies from Indonesia. The country’s exports of refined tin, which account for a third of the global market, dropped 14.5 per cent to 43,263 tonnes in the first half of the year compared with the same period of 2009.

The drop comes on the back of a crackdown on illegal mining in Bangka-Belitug, off Sumatra island, and the depletion of the easily mined reserves. Small and medium-sized smelters, which depend on supplies from rudimentary family-owned mines in the island, have reduced output or shut down because of the lack of tin ore supplies and credit strains, analysts said.”

Source: Financial Times, September 15, 2010

Observations:

  • Tin is mainly used for solder, alloys and chemical applications. Demand is strong in China, which is building its own production capacity.
  • PT Timah, Indonesia’s main producer, mines alluvial tin using dredgers and floating plants. Although PT Timah manages to increase output, the reduction of output of small and unorganized onshore mines results in lower Indonesian output.

Implications:

  • If Indonesia wants to have a sustainable position as a producer of tin, it will have to organize small scale miners and processing of the ore. Many small scale miners don’t have the scale to compete with international corporate competition.
  • Technological improvements for the small Indonesian miners could reduce production costs by as much as 50%, thus making deposits feasible that are currently not considered for production.