Indonesia to limit inter-islands tin trade to prevent smuggling

Indonesia plans to tighten domestic tin shipments as record high prices and dwindling ore supply, may prompt miners to smuggle the mineral outside the country, a senior trade official said on Tuesday.

Tin prices at the London Metal Exchange had rallied to above $30,000 a tonne in the first quarter of this year as demand recovered from global economic recession in 2008 and as supply from Indonesia was tight after centuries of mining has depleted easily-recover onshore tin deposit.

Tin price has fallen to around $26,000 a tonne recently.

Trade ministry plans to issue a regulation which will require miners to obtain approval from local governors before shipping tin ore to other islands within Indonesia, said Sri Nastiti Budiati, Director of Minerals and Manufacture Exports at the Trade Ministry.

"We concern that tin ore may be smuggled outside the country. It's not really shipped to between islands in the country," Sri Nastiti told Petromindo.com.

The plan to tighten inter-islands tin ore shipments came after complaints from the government of Bangka-Belitung provinces, Indonesia's main tin producing island and tin smelters there who suspected the mineral may have been smuggled to neighboring Singapore and Malaysia.

"We can't ban shipments of tin ore domestically but what we can do is limiting the activity by requiring governor's approval before shipment," she said.

Currently, miners or producers can ship tin ore to domestic buyers within Indonesia's 17,000 islands without permit from local government.

The planned revision on domestic tin trade also part of the trade ministry plans to overhaul current rules on tin trade to keep shipment in check and prevent it from flooding the market.

The trade ministry has put in place strict rules for tin exports in 2007 following a crackdown on illegal tin smelters on Bangka island in late 2006.

Under the regulation, smelters can obtain export permit if they are able to produce refined tin with minimum purity of 99.85 percent and must source tin ore from legal mines or team up with tin miners that own legal mines.

"There are currently three regulations on tin trade including for exports and domestic ones. We will put them into one regulation," said Sri Nastiti.

Exports of refined tin that is used in electronic soldering and production of soft drink cans, fell 27 percent to 7,013 tonnes in May from 9,708 tonnes in April.(fitri)