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NEWS UPDATES 22 May 2009

Indonesia to keep cap on tin output

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Indonesia’s plan to limit tin production to reduce environmental damage this year is still in place, Reuters quoted a senior Indonesian official as saying. The official clarified a previous suggestion that slowing demand may render formal caps unnecessary.

Bambang Gatot Ariyono, the director of mineral and coal production at the energy ministry and the most senior official dealing directly with the issue, said regulation on production quota for tin will be consulted with the parliament and expects it can be implemented this year, maybe at below 105,000 tonnes.

"The production volume will be consulted with the regional producers," he said.

The world's top tin exporter, which produces about 20 percent of world supply, has pledged to impose a limit on production in order to shore up prices and limit environmental damage on the Bangka-Belitung islands, where most of the mines are.

But in April top ministry official Bambang Setiawan had told Reuters that production quota may not be needed due to slowing demand on the back of global economic downturn.

Earlier officials had said it might be as low as 90,000 tonnes, but no formal decision has been announced.

Indonesia produced 71,610 tonnes of refined tin last year, and production is estimated to rise 47 percent to 105,000 tonnes this year.

Seperately, the world's largest-intergrated tin miner PT Timah Tbk expects tin prices to rebound to $15,000 a tonne in second half of this year, the firm's corporate secretary Abrun Abubakar said.

London Metals Exchange tin prices surged to a near six-months high early this month driven by shortcovering and fund buying, but at $13,640 a tonne are still down about 46 percent from their an all-time high of $25,500 struck in May 2008.

The firm has not revised production target this year at 45,000-48,000 tonnes despite recent jumped in tin prices.

"Production will depend on demand. If market is improving, we will adjust it," Wachid Usman, Timah's president director said.

Few tin smelters in Indonesia, the world's top exporter of the metal, will be able to crank up output to exploit higher prices because wet weather and depleting reserves have crimped access to ore.


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