Indonesia may allow more tin smelters to reopen

PANGKALPINANG, Indonesia Feb 22 (Reuters) Indonesia may allow more tin smelters to reopen after last year's crackdown on illegal mining but is determined to stop the environmental damage it has caused, a local governor said.

''I believe the maximum number is 10,'' Bangka-Belitung governor Hudarni Rani told Reuters yesterday on the tin-producing island of Bangka off Sumatra.

''We will issue permits to whoever meets the requirements. But for the time being, I think there are many (smelters) already,'' he said.

Indonesia, the world's second-largest tin producer after China, has allowed five smelters to resume operations and may allow two more after the crackdown, which triggered violent protests from local miners.

A total of 16 smelters have applied for new licences to reopen, but Rani didn't say when the smelters would restart.

Dozens of small smelters were shut last October after a police raid on producers that operated without licences.

Dealers said the smelters would need some time to get ready because of the tough requirements issued after the protests by local miners whose livelihood depended on the industry.

The smelters will have to produce refined tin with a minimum purity of 99.85 per cent and have their own mining sites to source raw materials.

They are also subject to stringent export rules, including verification of the source of the ore by a government-appointed surveyor and check on the purity of the ingots.

The new tin export rules will be effective on February 23.

Only state-run PT Timah, the world's biggest integrated tin miner, and PT Koba Tin have their own mining areas in Bangka, while small smelters had relied on supplies from local miners. Most of the local miners operated without licences.

PT Koba Tin is 75-per cent owned by Malaysian Smelting Corp Bhd and the rest by PT Timah.

Aang Kanaan Adikusumah, export director of mining products at the trade ministry, said seven companies have submitted documents to register as tin exporters.

''Those who have applied as registered tin exporters have received recommendations from the Bangka governor, including PT Timah,'' Adikusumah told Reuters.

Tin used in electronics, plating and as a lead-free substitute at the London Metal Exchange hit a new record high at 13,900 dollars per tonne on Wednesday, before closing at 13,850 dollars.

The market is awaiting an announcement from the Indonesian government this week on list of smelters that have secured an export permit.

Though PT Koba Tin has yet to submit an application to be a registered tin exporter, it is still allowed to apply at any time, said Adikusumah.

Koba Tin has suspended tin shipments following police investigations on the firm in connection with suspicions of illegally sourcing tin ore and operating outside its mining areas.

The police have arrested three Koba Tin directors, including President Director Anuar Sidek.

Rani said the government would keep an eye on the environment.

''Local people have been given a chance to mine, but they are not allowed to damage the environment,'' he said.

''If a mine is managed in such an unprofessional way, the damage will be extraordinary. We want to prevent that extraordinary damage,'' he said, without giving further details.

Small smelters emerged on Bangka after Jakarta banned exports of tin ore in 2002 to stop illegal mining.

Reuters SY DB1041