Indonesia tin smelters halt output on low prices

Patris Lumumba, the head of the Bangka Belitung Timah Sejahtera consortium, said the halt will likely remain for the rest of the year, or until tin prices recover to US$18,000 a metric ton.

“Many of our miners have been idle since early October as a result of falling tin prices and rising production costs (due in part to higher fuel costs),” he said.

“The lack of tin ore coming from the miners meant the smelters could no longer continue to produce tin ingots,” he added.

Tin hit a record high of US$25,500 per ton in May, mostly due to supply concerns over production from China and Indonesia, as well as low global inventories.

But prices have since fallen, tracking broad weakness in commodity prices and fears that the credit crunch will cut demand. Tin fell to US$12,900 a ton Monday, its lowest level since February 2007.

The consortium of seven smelters in Indonesia’s main tin producing region of Bangka Belitung province on Sumatra island has a combined production capacity of up to 5,000 tons of ingots a month. However, actual production has hovered around 3,000 tons, Lumumba said.

Indonesia’s largest tin companies, PT Timah and PT Koba Tin, have not cut production despite falling prices amid rising production costs.

PT Timah has said it will produce 50,000 tons of tin this year, down from its record 58,325 tons last year.

PT Koba Tin produces around 600 tons of tin a month.

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