Indonesia's Timah to Source 70 Pct tin from Offshore Mines

JAKARTA, May 24 -- Indonesia's state tin miner PT Timah Tbk (TINS.JK: Quote) said on Monday it will increase the share of tin ore from its offshore mines to as much as 70 percent of the total this year because of the difficulty of mining onshore.

The combination of competition from traditional tin miners and environmental issues has forced the world's largest integrated tin-miner to reduce sourcing tin ore from its onshore mines in Bangka-Belitung islands, Indonesia's main source of tin.

"Many of our onshore mining areas overlap with forest areas which requires us to obtain permits for exploration," Wachid Usman, Timah's president director, told reporters on the sidelines of a mining conference in Jakarta.

"We also face competition from illegal miners that mine in our areas. We want to boost the share of tin ore supply from offshore mines to between 60-70 percent this year," he said.

The firm produced 37,701 tonnes of tin ore in 2009, of which nearly 50 percent came from offshore mines.

Timah's refined tin production fell 8 percent to 45,086 tonnes in 2009, from 49,029 tonnes in 2008, due to declining tin output from its onshore mines.

The firm has planned to increase the number of cutter suction dredges by the end of this year to boost output from its offshore mines.

The tin industry in Bangka-Belitung, off Sumatra, has been hit in the past four years by weaker tin prices, a police crackdown on illegal mining, and the depletion of easily mined onshore reserves.

Timah also kept its target of refined tin production at 50,000 tonnes this year.

"We prefer to be conservative because the global economic crisis in 2008-2009 had a profound impact in our business," Usman said, adding that the firm will focus on value-added products which fetch higher prices than refined tin.