Indonesia may introduce new restrictions on tin production in order to secure future supplies and reduce environmental damage in the main tin-mining areas, a senior mining official said on Tuesday.
The new regulations would limit Indonesia's total output to around 100,000 tonnes a year, said M.S. Marpaung, director of coal and minerals at the mines and energy ministry.
Indonesia, which is the world's No 2 tin producer after China, exported 118,555 tonnes for the whole 2006, according to the state statistics agency, but some analysts say the figure was probably much higher because of smuggling and overproduction by small, independent smelters.
Exports of refined tin from February 23, 2007, when the government applied new tin export rules, to the end of December 2007, were estimated at 86,304.52 tonnes. Tin prices at the London Metal Exchange hit a new contract high of $21,300 a tonne on Tuesday, supported by the prospect of lower supply from Indonesia.
Tin prices, which have risen almost 30 percent since the start of 2008, are supported by concerns about tight supply and investor interest in commodities including metals such as tin. Details on how to control production would be given to the local government of the Bangka-Belitung islands, Marpaung said.
"If production exceeds the limit, it would be stopped. We cannot sacrifice our land just because someone else needs tin," he said, adding that the new ruling is likely to be ready in one or two months' time. Eko Maulana Ali, the governor of Bangka-Belitung, said last year that the islands' tin reserves may only last another 14 years, depending on how much exploration takes place.
Centuries of tin mining in the Bangka-Belitung islands, off the coast of Sumatra, have destroyed the environment, prompting the government to ban exports of tin ore in 2002. As a result, several small smelters sprung up on the island, and production of refined tin soared, leading to a drop in prices.